Photo by Oblivion 9999
Last year, Nathaniel Whittemore facilitated an online discussion by asking bloggers to answer the question: "What is the one thing you need to know before you donate to charity?" This year the answer to the question isn't overhead ratios and executive salaries.
Nonprofit experts cite many reasons that focusing on an overhead ratio is not the best way to choose a charity:
- It tells you nothing about the impact the charity has on people it's trying to help
- It discourages charities from investing in tools and expertise that would make them more
- The rules for determining overhead costs are vague and every charity interprets them
- Accounting experts estimate that 75% of charities calculate their overhead ratio incorrectly
You can check charity rating and directory sites such as GiveWell, Great Nonprofits, Philanthropedia, Charity
Navigator, and Guidestar, and Philanthropy Action to get information about charities that are effective in delivering their programs.
My giving style is streamlined. I have a particular interest area (Cambodia children) and I'm on the board of the Sharing Foundation. So, most of my charitable giving goes there. Next, in line are several organizations where I serve as a board member and a select few Cambodian charities. I know the organizations very well and the people involved. I know I'm making a good investment.
When I give to nonprofits based on a solicitation, I only give if know the organization first hand or know the person who asked me personally. I also do my due diligence by checking one of the above sites. I also visit the organization's web site as well.
During the holiday season, I get a lot of requests from friends, family, or colleagues to support their charity. My giving is usually in very small gifts - $10 here and there, sometimes $20. So, I make decisions based on the friend's credibility and judgment and if I'm not sure, I ask the friend or check out the charity myself. I would never make a donation to an organization that I haven't researched or didn't know.
Of course, if a stranger or someone I don't know all that well asked to donate, I wouldn't. There is some theory that backs this up from Robert Cialdini, Influence: The Psychology of Persuasion.
There is a definitely some value to putting together a personal giving plan so your holiday donations don't end up - as Britt Bravo has said - like gum in the grocery check out line.
How do you decide whether or not you'll make a donation to a nonprofit organization or not? What criteria do you use? Are overhead ratios important to you? Finally, do you have a giving plan?