How To Evaluate a Charity

Many people want to find ways to make the world a better place. Donating to charity is one excellent option — provided the charity does as it claims.

Not all charities are made equal. Some work diligently to help others in need. Others may spend most of their money and efforts on marketing, covering operational costs, or their salaries. Figuring out how to evaluate a charity is vital to making the most impact.

At Easy Donation Pickup, we know how important it is to find the right nonprofit organizations to donate to. That’s why we’ve compiled a few tips to help you do your due diligence.

What Programs and Services Does the Charity Offer?

What does a charity aim to do? Is it focused on relieving hunger, fighting against climate change, or something else? Before committing to it, you’ll need to evaluate the charity’s mission and programs — and their effectiveness.

What Specific Programs and Services Does the Charity Provide?

Before donating, remember that knowing how to evaluate a charity starts with research. Visit the charity’s site and explore what sorts of programs it offers. Does it have solid plans to address tangible needs or simply state a goal? How well does it outline its programs and services? How many programs does it offer, and does it explain how it supports them? You might consider looking elsewhere if you can’t find in-depth information on what the charity offers.

How Effective Are These Programs in Achieving the Charity’s Goals?

What sorts of programs a charity offers is only part of the equation; you also need assurance that those programs are leading to tangible results and that your donation will play a direct role in making that happen.

Look on the nonprofit’s website; the most reputable organizations will post statistics on program success rates. In addition, search the web for information from third-party sources; individuals and other organizations may offer insight into whether the nonprofit’s programs work or are mostly talk.

Does the Charity Align With Your Values and Goals?

A nonprofit may have amazing programs with a high success rate, but that doesn’t necessarily mean they’re right for you.

What sort of cause do you feel passionate about? For instance, if you want to help fight homelessness, a cancer charity (as noble as its mission might be) won’t be able to put your gift to appropriate use, and vice versa.

In addition, confirm that the organization’s methods align with your values. How comfortable are you with what the organization does? Do they have research to back up their approach? Take the time to determine whether an organization fits your needs before making a donation.

What Percentage of Donations Goes Directly to Programs Versus Overhead Costs?

When making a financial contribution, you want to know that most of it is going to the cause, not the organization itself. Take the time to look at a nonprofit’s budget breakdown and financial health to figure out whether it’s really giving its all to its mission.

Breakdown of Budget Allocation

Nonprofits need money to operate; they must pay employees, maintain buildings, and invest in marketing, among other things. That said, most of their money should go toward their cause.

Most reputable nonprofits will provide a budget breakdown on their sites. These breakdowns will show what percentage of their money goes where. If you can’t find an explanation of fund allocation, you may want to donate elsewhere.

Comparison With Industry Standards

How does the organization’s budget allocation compare with that of other nonprofits? Take the time to evaluate them side by side; if one seems to spend more money on upkeep than others, it likely isn’t very reputable.

Does the Charity Have Effective Governance Structures in Place?

A good governing structure is vital for effectiveness and accountability. Research what’s in place, as without a solid governing structure, the charity may not implement its programs as effectively.

How Accountable Is the Charity to Its Stakeholders?

Accountability is a key part of ethically running a charity. A good charity should provide transparency about its funds, its programs’ success, and other factors to prove it has the stakeholders’ best interests at heart.

What Financial Transparency and Accountability Measures Should I Look for in a Charity?

If you want to know how to evaluate a charity, you must learn to recognize what to look for. Before you donate, be sure you are doing the following.

Reviewing Financial Statements

All nonprofits are required to file an annual report called Form 990. This report gives an overview of their finances for the previous year. While it occasionally takes a while for the information to become public — especially for larger organizations — it is a useful tool to see where the company is allocating funds.

Analyzing Administrative and Fundraising Expenses

Take a look at the breakdown of the nonprofit’s expenses. How much did it spend on administration and fundraising compared to how much it put into its programs? While some money will need to go to the former areas, most should go toward its programs.

Just because a charity is transparent about its finances doesn’t mean it uses that money wisely. Take the time to understand where every dollar goes.

Resources for Charity Evaluation

Finding the right charity can feel stressful. Thankfully, resources are available to help streamline the process, so you can donate with the fullest confidence that your efforts will have the desired effect.

Independent Rating Organizations

Certain organizations — like Give.org, CharityWatch, and BBB Wise Giving Alliance — evaluate and rate charities, making it easier to find reputable organizations.

Online Tools and Databases

Rating organizations aren’t the only useful sites; there are also plenty of online databases for exploring reputable charities. Certain sites may let you find charities based on your interests, the nonprofit’s size, and more.

Expert Recommendations

Sometimes, the best way to find the right charity is to reach out to the experts. Ask people who have worked with or studied nonprofits what organizations they’d recommend. This way, you’re more likely to find a reputable option.

Personal Research and Due Diligence

In addition to utilizing existing tools, conduct your own research. What sorts of information does the charity offer on their site? Has it recently audited financials to ensure compliance and accountability? What do reviews say about them? Dig as deep as you can before committing to a certain nonprofit.

Are There Any Red Flags To Watch Out for When Evaluating a Charity?

Before you donate, ask yourself the following:

• Is the charity transparent about its financial situation and budget?
• How much information does it offer on its programs’ success?
• Does the site outline its mission and programs?
• Is it tax-exempt, and will your donation be tax-deductible?
• Can you find information about how people run the charity?

You may want to donate elsewhere if you can’t find this information.

Determining how to evaluate a charity is key to finding the right one. But once you’ve narrowed down your options, you’ll also need a way to get your donations there. At Easy Donation Pickup, we can help. We can pick up donations, teach you about charity auctions, and much more; call (855) 628-8387 to schedule a pickup.