A guide to giving for the greatest impact
The recession and global pandemic are hitting charities where it hurts the most: in the wallet. Most fundraising professionals expect donations to decline in 2020 compared with previous years, a situation likely to continue through 2021, according to the Association of Fundraising Professionals.
Meanwhile, the need for charity is climbing, particularly to combat rising poverty, hunger and homelessness from the pandemic’s economic fallout.
“There are so many needs that it can be overwhelming for donors,” said Una Osili, professor of economics and philanthropic studies at Indiana University and associate dean for research at the Lilly Family School of Philanthropy.
The U.S. has 1.6 million nonprofits, a figure that has quadrupled in the last 40 years, according to Kevin Scally, chief relationship officer for Charity Navigator, which evaluates nonprofits and rates their effectiveness.
Is it better to give to a large nonprofit or a small one? Should you go global or stay local? There’s no single answer, only ways to assess how your dollars might have the greatest impact for the causes you believe in.
Charity starts at home
Adela Crandell Durkee, 69, donates recurring amounts to PBS, NPR and Catholic Family Charities, but beyond that has struggled to find national organizations to support.
In the past, she and her daughter raised money for breast cancer through the Susan G. Komen walk, only to encounter recriminations from family and friends who opposed the Komen Foundation’s support of Planned Parenthood.
Durkee and her daughter donated hair to Locks of Love to make into wigs but then grew concerned that the organization wasn’t rated as favorably as others.
“It got to be too much work for me to sort through all the threads and truly give consciously. So, I changed my tactic,” she said. “I try to pick things that are local and where I can see the direct impact.”
Now, Durkee volunteers at a local food pantry, Habitat for Humanity and her church, where, she said, “the overhead is low and the feedback is plentiful.”
Some donors give in concentric circles: one local charity, one regional, one national and one international.
“On the local level, you as a donor have more of a connection to the work being done,” Scally said. “On a national level, the benefit of supporting a larger organization is they have more resources to do more. In addition, many national organizations, especially the good ones, will have local partnerships.”
Once you know the causes you want to support, visit websites such as Give.org and CharityNavigator.org that evaluate nonprofits, provide comparisons, and even suggest charities if you search by topic or Zip code.
These websites provide details about a nonprofit’s activities, and some also rate and rank charities according to financial efficiency, transparency and impact.
Akira Barclay, a philanthropic consultant, noted that on these sites larger organizations tend to get higher ratings because they have the resources to collect data and present themselves in a favorable light.
“A smaller nonprofit, just because they don’t have that concrete data, doesn’t mean they aren’t making an impact,” said Tracey Webb of Laurel, Maryland, a collective-giving expert and founder of Black Benefactors, which is based in Washington, D.C., and makes grants between $500 and $10,000.
Of course, check the nonprofit’s website for annual reports or newsletters. Evaluate the staff and board leadership, including their experience and background.
“I like to look at their social media pages,” Webb said. “Sometimes they’re updated more frequently than the website.”
For you to claim a tax deduction for your donation, the organization must be a registered 501(c)(3) nonprofit, fiscally sponsored or structured as a donor-advised fund.
You should be able to find the charity’s 990 form, which most nonprofits must file annually with the IRS, on irs.gov or through a service like Candid GuideStar or Foundation Center. This form contains financial results, revenue, expenses and the compensation of the nonprofit’s five most highly paid employees or contractors.
Assess whether the organization is a responsible steward of resources by looking at its results, the percentage of revenue that goes to overhead, and the amount of cash it has on hand to meet operating costs.
“If the organization isn’t sustainable, you may want to be a bit cautious,” Osili said.
The gift of time
Besides giving money, “there’s also the volunteering of time, talent and testimony,” Osili added. “How do you support the organization? Do you post on social media? They could benefit from that testimony.”
Consider volunteering, which can eventually lead to service on the board of directors.
“Donors that get involved in the organization tend to get more satisfaction,” Osili said.
Give as part of a group
Consider joining or starting a collective-giving group, which combines gifts for a greater impact. Some alumni do this by pooling contributions from a graduating class, for example.
“Anyone who’s making a choice to give during this time, their generosity is appreciated,” Barclay said. “It’s so important right now, more than ever.”
© 2020 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC.