Americans are generous and good-hearted.
They donated more than $144 billion to nonprofit organizations last year, an 11 percent increase over the previous year. About eight out of every 10 of those dollars came from individuals rather than companies.Unfortunately, not all of those well-meaning folks knew much about the charities to which they contributed. Some organizations don't exactly do what they say they do, are financially inefficient or, in the worst case, are outright scams.
Here's a good rule of thumb: No organization that's on the up-and-up will hesitate to give you the complete information about it that you seek. It's proud of its worthy accomplishments, good deeds and delivery system, with nothing to hide.
Legislation currently pending in Congress would speed the relay of necessary financial information such as charities' incomes. It would require organizations to provide a copy of their IRS Form 990 within 30 days of a request. Even without passage of that bill, nine out of 10 organizations already do so. Yet others hesitate for a number of reasons, such as not wanting to disclose salaries of their five highest-paid individuals.
How your money is actually used is perhaps the most crucial consideration.
"We believe that a minimum of 60 percent of the money donated to a charity should go directly to charitable purposes," said Matthew Landy, vice president of the National Charities Information Bureau in New York City. "Solicitation materials and financial statements should disclose this percentage."
Clearly, a cause worth doing is a cause worth explaining.
"Charities get away with being incredibly vague, which allows for waste and inefficiency in the nonprofit sector," declared Daniel Borochoff, president of the American Institute of Philanthropy in St. Louis. "People must ask for accountability."
If an organization says it wants to feed the starving, it should say how many people it fed last year, Borochoff contends. Similarly, if it claims to be an environmental land protection group, it should be able to show much land it has actually protected.
The individual donating the money must also use common sense.
"Don't give cash to a charity, but make your donations by check or money order and make the check out to the official name of the organization," advised Bennett Weiner, vice president in charge of the Philanthropic Advisory Service of the Council of Better Business Bureaus Inc. in Arlington, Va.
Don't be pressured to make an immediate donation, Weiner said, since a charity that asks for a donation today should also welcome it tomorrow. Moreover, excessive pressure may be a signal of an underlying problem with that charity.
Some additional advice from the experts:
- When solicited by telephone, ask that an annual report and financial statement be sent to you. Never give out your credit card number over the phone.
- Don't be fooled by names of charities that sound impressive, or that closely resemble names of more familiar organizations.
- If you're sent items you never ordered, such as king rings, seals or pens, you're under no obligation to pay or to return the merchandise.
- Always beware of solicitations that try to make you teary-eyed but give no explanation of the charity's actual programs or how it will help solve the sad problem.
A number of worthwhile publications can help you determine the charities worthy of your donations.
The National Charities Information Bureau, whose "Wise Giving Guide" quarterly newsletter costs $35 annually, will send you a free copy. The group's address is 19 Union Square West, Box 501, New York, NY 10003. It will also, upon written request, send free reports on up to three individual charitable organizations.
The American Institute of Philanthropy's "Charity Rating Guide & Watchdog Report" quarterly newsletter rates charities with grades of "A" through "F." It costs $35 annually and it will send a free copy. Address is 4579 Laclede Ave., Suite C, St. Louis, MO 63108.
The Philanthropic Advisory Service of the Council of Better Business Bureaus Inc., whose "Give, But Give Wisely" quarterly newsletter costs $12 annually, will send a free copy. Its address is 4200 Wilson Blvd., Suite 800, Arlington, VA 22203-1804. It also publishes the "Annual Charity Index" reference book, available for $16.95.