It’s Giving Season. Here’s how to donate wisely.
Giving Season has arrived. This time of year serves as a reminder to give generously, with an emphasis on charitable giving. Companies advertise their year-end fundraising drives. Volunteers sit outside grocery stores, ringing bells and encouraging shoppers to donate to their cause. There’s a good reason for these efforts: donors tend to be more generous during the final two months of the year.
With so many options for charitable giving, people want to know how they can donate wisely. If you want to give to causes that tug at your heartstrings, you’ve come to the right place. In this blog, I will share how you can use your head and heart to inform your giving and to ensure your donations make a difference.
Consider your values
There are 1.8 million IRS-registered nonprofits in the United States alone. These organizations support many causes, focus on various populations, are located across the country… and the list goes on.
Nonprofits are as diverse as their donors. Rather than give to the first organization that solicits you, proactively look for an organization that aligns with your values. Consider the type of nonprofit you want to support. Ask yourself:
- What cause or issue area(s) do you want the organization to address?
- Do you want to give to a local, national, or international organization?
- Are you seeking to make a financial donation or an in-kind donation, such as volunteering your time or contributing items like clothing and food?
Asking these questions will get you started in the right direction.
Focus on the mission
Now that you’ve determined the type of charity you want to support, it’s time to research their mission. A nonprofit’s mission statement communicates its purpose, philosophy, who or what it caters to, and how it plans to do so. Consider supporting nonprofits that have an easy-to-understand mission that aligns with your giving priorities.
Candid’s GuideStar can help you find information on a nonprofit’s mission, including the needs the organization addresses, the cause it exists to support, and what makes it unique.
To find this information, head to the search on Candid’s GuideStar and type in the name of the organization. To make sure you have the right nonprofit, you can also double-check their employer identification number (EIN), which is a unique identification number that the IRS assigns to organizations.
Get the facts
Now that you’ve found organizations that meet your basic requirements, it’s time to dig deeper to narrow down your list to the nonprofit you’d like to support.
If you’re on the organization’s nonprofit profile on GuideStar, pay attention to indicators of a nonprofit’s performance, such as impact results, transparency, and leadership. Contrary to popular assumption, these indicators can give you a fuller picture of an organization’s performance than just focusing on what percentage of its budget is dedicated to overhead costs (also known as overhead ratio). When nonprofits are forced to focus on reducing overhead rather than fulfilling their missions, it can result in reduced ability to achieve impact. Additionally, you can visit a nonprofit’s website and read its annual report to find this information.
You can also check a nonprofit’s profile to see if it has a Candid Seal of Transparency. A Seal of Transparency indicates that the organization has provided specific, up-to-date information about their leadership, financials, and more. But take note: a Candid Seal doesn’t mean a nonprofit is better than organizations that don’t have one. Rather, it means that the nonprofit has provided more information on their Candid nonprofit profile to help you make informed giving decisions.
If you’re passionate about supporting a charity regardless of how the organization makes it onto your radar, it’s important to verify that the charity is legitimate. This helps ensure that the hard-earned dollars you donate are used to drive real, positive change.
If you find an organization on Candid’s GuideStar, you’ll know the Internal Revenue Service (IRS) recognizes it as tax exempt.
If you’re having difficulty verifying a nonprofit’s legitimacy, investigate further.
- Ask to see the organization’s IRS letter of determination, which is a letter from the IRS approving an organization’s formal tax-exempt status.
- Ask to see the organization’s Forms 990, which is a tax return that exempt organizations must file with the IRS each year. (You can also look these materials up on the IRS website, if the organization is unwilling to share their tax-exempt documentation with you. But if this is the case, it is often a red flag.)
- Churches and certain other religious organizations may, but are not required to, file an annual Form 990, so if the organization is faith-based, ask to see its official listing in a directory for its IRS-recognized denomination.
- If the group doesn’t have 501(c)(3) status but does have a fiscal sponsorship, you can research the fiscal sponsor organization.
Trust your instincts
Above all, trust your gut when making giving decisions. If you have concerns about a nonprofit, don’t contribute. Instead, find another nonprofit that does similar work but makes you feel more comfortable.
Whether you’re looking to donate wisely during Giving Season or a different time of the year, it’s worth taking the time to make sure your donation will make a difference. Whether donating cans at your local soup kitchen or providing millions of dollars in funding for disaster relief, due diligence leads to more informed giving. Make a true impact by giving with your head as well as your heart.
This Giving Season, we’re uplifting local charities with our ‘Change begins with you’ campaign. Find a nonprofit in your community to donate to and support today at candid.org/guidestar. If you want to spread the love, share the causes you’re supporting on social media using the hashtag #CandidGiving!