Where Should I Donate Money? The Charity Transparency Issue

“Where should I donate money?” is a question that many potential donors have asked themselves when trying to do good. Monetary donations to charitable organizations are great ways to cause positive change in your community. However, it sometimes seems impossible to know which cause to support, or which charities will use your money most effectively. In order to help you navigate this issue, we put together a few tips that will help you figure out which organization will do the most with your money.

Check What Percentage of Your Donation Will Go to Those in Need

givingmoney-dennyIdeally, one hundred percent of each monetary donation would be spent on the advertised cause of a charity; however, it is important to remember charities also need to pay for their administrative costs, such as employee salaries and office electric bills. One useful metric for judging a charitable organization is its overhead ratio. This term describes the percentage of its budget an organization spends on administrative costs and fundraisers, rather than on actual aid programs. Charity evaluation services such as Charity Watch are helpful tools that let you check any organization’s overhead ratio and make sure your donation is being used the way you want it to.

Find out Whether the Charity Passes on its Revenue to Other Non-Profits

In addition, because all charities use a percentage of each donation to cover their operational costs, donating to charities that use the bulk of their revenue themselves, rather than passing it along to other organizations in the form of grants, will also help you maximize the impact of your donation. Although charities giving money to other charities sounds like a great thing, it means that your monetary donation may have to pass through two separate charities, and thus a percentage may be siphoned from your donation twice, before your money is used on someone who needs it. You can determine how many grants an organization writes by finding its IRS Form 990, either by searching “990” and the name of the organization, or by logging onto GuideStar.com. If the charity you have in mind gives a lot of its money to other organizations, consider donating directly to one of the organizations it supports instead.

Think About Whether the Charity Is Encouraging Empowerment or Dependency

Finally, whether you are giving to a charity that supports impoverished families in Uganda, or in your own neighborhood, it’s better, in our opinion, to support an organization that empowers its recipients rather than simply offering temporary aid. While both forms of giving are certainly needed, organizations that give aid and nothing more may create a cycle of dependency, where the people they are supposed to be helping become permanently dependent on their aid. To avoid this dilemma, try to support organizations that focus on educating and finding work for their clients, in addition to providing economic or substantial aid. In any case, be sure to check a charity’s website to see what types of programs they offer before you donate.

By considering these factors before making every donation, you can ensure that you maximize the do-good feeling you receive every time you donate, and no longer have to ask yourself “Where should I donate money?”

In addition, if you are in the city of Chicago and have used belongings to donate, instead of money, consider giving through Zealous Good. Our quick, simple, and transparent process allows you to know exactly how different charities will use your item and to choose the charity that you feel will put it to the best use. Learn more about our process, or donate today to see which Chicago charities can use your in-kind donation.

Denny Falls is a 2013 project management intern at Zealous Good, an in-kind donations marketplace in Chicago. You can find Denny on Twitter at @dfallss and on Google+ or Zealous Good on Facebook and Twitter at @ZealousGood.

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