How to Vet a Charity

by Emily Guy Birken on February 20, 2014

In the wake of major tragedies like Superstorm Sandy and the Sandy Hook shootings, we often seek out ways to help through charitable giving. Unfortunately, scam artists take advantage of these generous and sympathetic impulses by creating false charities that only work to line the pockets of the unscrupulous organizers. Here’s what you need to know before you donate money to any charity:

Do not give money to a charity based on a phone call or in-person solicitation

While legitimate charities certainly solicit donations through phone calls and in person, these are easy ways for scam charities to take advantage of your emotional response to their “mission.” If a phone call or door-to-door solicitation piques your interest in a charity, thank the representative for their time, and start doing some research into the charity on your own.

Check out the charity’s financial information

There are three things you need to know about the finances of your prospective charity: tax-exempt status, percentage of budget that go towards the mission, and the CEO’s salary. This information will help you decide if the organization is truly helping the cause. To find all this out, check out the websites Charity Navigator and GuideStar, which list all of the financial information that is publicly available.

A good rule of thumb is that a well-managed charity should have at least 75% of its funds go to programming and should pay the CEO about 5% or less of its total budget.

Look for transparency

Charities that you want to donate to are completely on the up-and-up. They do things like hire independent auditors, offer board members oversight authority and opportunities to vote on key issues, and put in place conflict-of-interest, whistleblower, and privacy policies. If a charity is unwilling to discuss this side of its workings, find a different charity that will.

Find out exactly how and how much the charity helps its cause

The most important part of charitable giving is knowing that your donation will make a real difference in the lives of the people affected. Ask the charity for specific information about how your donation will help fulfill its mission.

Give to charities you have a history with

If all of this work sounds exhausting, you can always fall back on giving to charities that you have already familiarized yourself with. You can either give to an organization that you once volunteered for, or even one whose services you benefited from—which will add the karmic punch of paying forward the help you once received.

The Bottom Line

Charitable giving is a wonderful way to give comfort and aid to the people and causes you care about most. However, wherever there is money being donated, there are also sharks looking to make a buck off of your generosity. Make sure you know exactly who you are giving money to when you donate, and decide carefully before writing that check. You’ll feel better knowing that your money is really making a difference.

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Emily Guy Birken

Emily Guy Birken is a freelance writer and stay-at-home mom who is passionate about personal finance. She lives in Lafayette, Indiana with her mechanical engineer husband and her toddler son. She blogs about parenting at The SAHMnambulist and about the funny side of money at Live Like a Mensch.
  • Great post! I definitely think it’s important to do your research before ever giving your hard earned money to a charity.

  • Great post. These points are excellent and everyone should use them. There are so many places that look like a charity but really aren’t putting money towards the cause they are advocating. Administration seems to take it all.

  • It never used to be a problem when someone would come to the door looking for a donation but now it seems like we can’t tell the real from the fakers. We had a bloke show up in the summer with a tag around his neck a binder and a well known charity looking for money. I asked if they had a website and he said yes and I said I would donate through there. Well all hell broke loose (more so in a why sorta way) after that. Why, bla bla, I’m right here bla bla… that was enough for me. You would swear he was making a commission. I’m not handing over $50 cash to a dude with a binder he can buy at Walmart and a badge he can make from the dollar store. I don’t know who to trust any more. I’d be interested to read how others deal with this. Research is the first step I agree. Mr.CBB

  • When I donate to a charity, I tend to look at it from the perspective that maximizing the donations for the good of the cause is of utmost importance. After all, why would I scrimp and save to donate only for the CEO to throw a lavish benefit or have grandiose corporate offices?

  • Boris

    I definitely look for the CharityNavigator symbol when I donate. I highly recommend Operation Blessing, they’re always good with their money.

  • There are so many charities which eat up the majority of the donations in administration costs. I always like to look into any charities I donate to just to be sure that they are doing what they say that will be doing with the money.

  • Jason @ WorkSaveLive

    It’s unfortunate for new charities, but reality is that it’s just smart to take this approach to vetting a charity. I use Charity Navigator a lot and the only other charities I support are ones that I know (that are local to my city).

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  • Something to add to this: don’t donate to a charity just because friends and family support them. Do your own research and make sure it’s a good charity before you send them your money.

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