Thinking of Donating?
I have been surprised so far this year. I have not seen that “info” graphic telling people not to donate to this charity or that one because so much of their money goes to “overhead” instead of directly to the people they are supposed to be helping.
Over the years we have refuted those claims. This year, before they even really get started, and knowing that the holidays are the time the largest giving occurs, let’s take a look at giving.
It is always important to know your charity – not just before giving, but after as well. Remember, the only constant in life is that everything changes. That charity that was doing an outstanding job these past years may have new management, new board members, and new activities that you do not agree with. Assuming the organization has not changed could put you in a position of supporting something you really do not believe it.
The reverse is true as well. Some charitable organizations will listen to their constituents and donors and get a “wake up call.” What may not have been a great organization last year could be an impactful one this year.
Here are some tips to help you choose a charity to support.
- Find a mission you really believe in. Lots of organizations are going to be making “the ask” this holiday season. Give as much as you wish and can, but remember, find what speaks to you. Don’t let yourself be pressured into putting money into a donation jar unless it is what you really want to support.
- Who do you want to support? If you know the exact charity or charities you want to support, great! If you don’t, and are looking for options, check out these locations to find charities you can get behind.
Our Spotlights feature charitable organizations we have looked into and have found to be worthy of support.
Charity Navigator and Guidestar are reporting agencies, which will give you some information about the organizations – how they spend their money, where they get their money and who runs the organization.
- Overhead vs. mission. This is a big issue for many people. They want their money to do as much as possible for the cause they are choosing to support. Rightly so! Unfortunately, the general terms “overhead” and “mission” are not as clear as one might hope.
- Overhead is what it costs to do business. Easy enough. Except it really isn’t. Overhead for one organization may be high while another is low – and that may tell you nothing of whether they are being good stewards of your donations. Let me give you an example.
Organization A spends 75% of their donations on overhead: rent, salaries, utilities, insurance, IT. That is a lot of money.
Organization B brings in $1.6 million annually. $888k of that goes to program expenses – actually carrying out the mission. That means about 50% of the donations collected go to doing the work of the organization.
So Organization A spends more in “overhead” than Organization “B”. If you are evaluating only on which organization puts the largest amount of the donation to work for the mission, based on the numbers, neither one does a good job. This too, maybe misleading.
Looking more closely, organization A is a re-education organization dedicated to helping dropouts get their GED, helping displaced workers train for new careers, helping people who are in poverty train for employment with higher wages which will lead to a better situation. That “overhead” pays teachers salaries, provides facilities in which to conduct trainings, keeps the light and heat on as well as covering basic business operations like insurance and administrative staff payroll.
Organization B, is a real organization whose purpose is to share “God’s word with others.” Exactly how they do that is not available. However, 6% of their revenues (all donations and grants) is paid to the President of the organization. Someone has to do the job and deserves to be paid for their time and knowledge – just like in any employment situation. Another 10% goes to administration. The rest goes to fundraising. In my opinion, that is a lot of money to spend off mission, just to bring in more money, nearly ½ of which will not go to the purpose of the organization.
More of the financial resources of Organization A are spent on “overhead” – in rent and salaries, etc. than the percentage thus engaged by Organization B. However, technically, that overhead directly relates to the provision of their promised services.
Deciding that an organization is worthy of your money is not as simple as an infographic that says this one spends X% on overhead and Y% on mission.
- So what is mission? Every organization has to declare what it is about when it is formed and approved by the IRS for non-profit status. That statement declaring what they are about is the mission of that organization. In the examples above, Org. A’s mission is to train. Org B’s is to spread the word of God.
How much money is needed to “spread the word of God?”
How much money is needed to retrain people for new careers?
Please do not misunderstand. I have no issue with spreading the word of God and nothing against people who do. I am merely illustrating that missions have different requirements and different levels of need for overhead vs. mission fulfillment.
These levels of requirement vs. use should play into the decision regarding which organization is worthy of your money.
- Types of donations. There are countless ways to support a cause. You may want to use several, or maybe only one. But you should know your options.
- Money. Easiest way to go. Throw your change into the donation can, barrel, collection plate – whatever vessel they are using. You control how much money they get and it is easy enough to do and be done.
- Time. This is another easy one to understand, but it can mean a lot more than you know. The soup kitchen needs the hands to help fix and serve food and clean up after, but the smile you share with people who come through the line might mean even more. The opportunity to spend a few minutes with someone who needs you – on any number of levels – is priceless. To them and maybe even to you.
- In-kind. Giving stuff. Numerous businesses do this with their close out models, scratch and dent merchandise and overstock. Individuals can as well. How about providing cut firewood in an impoverished community that is dependent on stoves and fireplaces for heat? Or, recently, I learned about a drive to crochet or knit read caps for newborn babies in support of The American Heart Association and The Children’s Heart Foundation.
Of course In-kind and time and money may all overlap. But is that such a bad thing?
As the holidays get closer, think about where your heart is and how you can make a difference. Even if you never hear the words, someone will thank you for it.