volunteers to decide which organizations deserve their support and
which ones will use their gifts wisely.
How do you select from among the many charities that ask for
your money? By what criteria can you judge if your money is being
used wisely?
A good rule of thumb to follow, when evaluating a charitable
request, is to follow the Donor Bill of Rights. The Bills of Rights
was developed by the Association of Fundraising Professionals
(AFP) and numerous other associations representing the nonprofit
sector have adopted it. Some key points that can help you make
educated decisions about philanthropic giving follow.
Mission
Does the organization have a clear mission statement that is
articulated to the public? Is this mission one for which you have
a passion? Is it clear what this organization does? Many organizations have similar names and some, unfortunately, purposely
choose a name similar to a well-established, reputable charity in
order to defraud the public. You need to understand who the organization is and what it does before getting out your checkbook.
Leadership
You have a right to be informed about the people who provide leadership and governance of the organization. Is the board
of directors comprised of community leaders that are known and
respected? Is the board qualified to govern the organization and
assure that it fulfills its mission? Do the members of the board
have term limits, and how long have they served on the board?
Who are the leaders of the organization; do they have the credentials required in the field in which they operate? You should
look for a list of the board and executive staff on the letterhea d,
annual report, or other written materials of the organizations. You
should also ask to see copies of the annual report to see if the board
members are listed as donors.
Financial Information
In many states, most nonprofits are required to register with
the Secretary of State Charitable Organizations Division (or similar
authority) before they can raise money from that state’s citizens.
This rule is true regardless of where the charity is based, so solicitations from all organizations that are required to register must
contain the a written disclaimer that directs potential donors to the
Secretary of State for more information about the charity’s financial
statements. If you have concerns about a registered charity, contact your state’s charitable division and ask for the financial reports.
Most 990 forms (the tax return required to be completed by most
nonprofit organizations) are available on the Internet through the
Guidestar website—www.guidestar.org. The 990 forms will list income and expenses of the charity including fundraising expenses.
Acknowledgment & Recognition
The Donor Bill of Rights also states that donors are entitled to
proper acknowledgment and recognition for gifts to charities and
that they have a right to remain anonymous if they choose to do
so. Charities are also required by the IRS to tell the donor the Fair
Market Value of any substantial goods or services received in exchange for a donation. For instance, purchases at charity auction
are not tax deductible because the donor has received goods equal
to the value of their “contribution” to the charity.
So How Do You Decide Where to Spend Your
Time, Talent, and Treasure?
First of all, be informed—follow news stories about local and
national charities, ask the organization’s leadership to provide information about the charity before making gift. Read the materials
the organization publishes, such as annual reports, brochures, website, etc. Talk to board members of the organization. Talk to others who donate to this organization. If there are doubts about the
legitimacy of a charity, call your Secretary of State or check their
website to see if the charity is registered. Ask if the person soliciting
you is a volunteer or paid solicitor. Fundraisers who are members
Many donors give small gifts to an organization first and track how the organization
acknowledges and recognizes their gift before
making a more substantial gift.
of AFP also subscribe to a code of ethics that, among other things,
prohibits them from receiving a percentage-based compensation.
Many statewide associations of nonprofits also offer a program
called Standards of Excellence, which grants a “seal of approval” to
nonprofit organizations who have met rigid criteria covering financial, fundraising, personnel, ethics and program areas. Looking for
the Standards of Excellence approval on charities that are asking
you to donate is another way of assuring that you are contributing
to a legitimate charity.
Test the organization—many donors give small gifts to an organization first and track how the organization acknowledges and
recognizes their gift before making a more substantial gift. Getting
involved as a volunteer, sharing talents and time, before making
a gift, is also a good way to discover if the organization is one for
which you feel a real passion.
Focus on the positive aspects of philanthropy—a gift to charity
can make a real difference in the life of a child, a family, or a community. And can help your business, your employees, and your
customers.
So…give, but give wisely.
This article is not meant to provide tax or legal advice; please
consult your tax advisor before making a charitable gift.
The Philantrepreneur Journal
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