How to Choose a Nonprofit or Charity to Support

Jenny Handwerk |

How to Choose a Nonprofit or Charity to Support

Knowing that your philanthropic contribution will be used wisely and benefit the initiatives you care about is critical. 

Nonprofits must submit a Form 990 with the IRS annually so you can investigate a nonprofit's finances using a few online sites. By evaluating the charity before donating, you can see how effective your money will be and have peace of mind knowing that the organization will most likely spend your donation effectively and do what it promises.

If you want to make a difference and are willing to give where you believe you can do the most suitable (independent of subject area), how do you decide where to donate? This is a concise collection of our most beneficial tips.

Carefully assess the problem you wish to focus on.

The more you provide as a percentage of your annual income, the more time you should devote to studying. A 1% gift is equivalent to a few hours of work, whereas a 50% donation is equivalent to a month's worth of research. 

Another consideration is how strongly you expect the research to influence your judgments. For example, if this is the first time you have given this much thought, conducting additional research is worthwhile. However, even if you have given it a lot of thought, remember that you may need more confidence in your current beliefs, so further research may be necessary to verify that your donations are doing the greatest good.

Determine Your Criteria

This phase will assist you in identifying not only a relevant organization but also the appropriate organization to sponsor. Key considerations include: 

The type of organization you would want to help. Local, national, or international? Bigger or smaller? Your contributions may go further with a small, local charity, and you will most likely witness a direct result of your efforts. However, the influence could be minor. Supporting a more prominent, visible charity with ambitious goals may be more appropriate if your motivations are more strategic or you wish to see broader change.

Review the Organizations

Evaluate possible charities using your rationale and criteria until you have a shortlist. For example, if you want to make a strategic or values-based decision, compare an organization's mission and vision statement to your own.

It is also critical to ensure that each shortlisted firm is properly governed. You want your gift to be used wisely! So, choose your top three or four possibilities, then conduct "due diligence" by asking the following questions: Is it getting closer to its objectives? What is its financial situation? What reputation does it have? Answering these questions will give you a better picture of the charity's situation. 

How to Evaluate a Nonprofit's Effectiveness

Determining a nonprofit's expenditure of funds is merely one aspect of assessing it. It's also critical to comprehend the effects of the financial investments made in services and programs.

To learn more about the nonprofit's effect, visit its website and social media accounts. A lot of nonprofit organizations will publish impact statements or newsletters detailing the work they have completed. Additionally, you may uncover endorsements from individuals they have assisted.

Look at the nonprofit group's annual report, which many organizations offer on their websites, if you need to be up for delving deeply into their Form 990. Though legally exempt, many NGOs utilize these reports to briefly outline their accomplishments for the year and how they were achieved.

Easy-to-read pie charts that illustrate how much money organizations spend on salaries, office costs, fundraising, and programs—like medical research or church maintenance—are also frequently included in the reports.

You'll want to be assured that the organization still needs and merits your support and that your gift makes a difference. Thus, please don't be scared to monitor its development and reevaluate your support periodically.