My Simplistic Guide to Giving

With the recent earthquakes in Haiti, it find it very interesting that so many charities have come out and are aggressively soliciting donations for the people that have been impacted by these events. Having worked with a 501(c)3 to help them raise funds to support the implementation of their program, I have some insight into what make a good charity and what makes one that is less than honest.
When you are deciding which charity you would like to support in their efforts to help Haiti (or any other charity for that matter), I have some suggested steps you should consider before signing over your check or making a commitment. In business there are lots of people who would like to separate you from your money, and some wolves hide under the disguise of charitable giving to achieve the same goal. Here are my steps:
1. Carefully decide what your goals for giving are. Are you interested in helping to rebuild the infrastructure of Haiti or to help women and children who have been impacted? Is it important to you that you help the thousands and thousands of homeless pets? Do you want to help with providing food and clean water? Whatever your goals are, there is a charity out there that can help you achieve them. If you are looking for another cause, Google can be a powerful tool. An extensive list of charities who are solid and are helping in Haiti is located here
2. Check what percentage of total revenue goes towards fundraising and administrative costs. This is very important. There are charities out there that will have a very high percentage of their revenue go towards both of these costs. Mind you, it is very difficult to find a charity that has 100% of their raised money go to the intended recipients, but you can get some that have a very high percentage that does. For example, currently the Red Cross has 90% of their raised money that goes to programs, with 4% that goes to fundraising costs, and 6% that goes to administrative costs. Only you can decide what an acceptable percentage is, but the accepted percentage within the industry is that 65% of monies raised go to programs.
The Red Cross is a good example of meeting the industry standards for the percentage of money that goes to funding programs. See their report here. But there are others that are more shady. I know of a couple who had expensed of upwards of 90%. Here is a list of ten charities that are “drowning in administrative costs.”
If you would like to conduct a thorough analysis of an organization, the Better Business Bureau publishes most of this information here. There is another site called Charity Navigator that is also comprehensive. You can find it here. It is a great place to start researching where you would like to donate your money. The tax return form all charities use is called a 990. By law, they are required to make that available to you for review at your request. You can learn a lot from the review of a tax return.
3. Talk with people familiar with work done by the charity. My Dad’s company sponsors a charity that rehabs homes for kids and adults who find themselves with limited mobility for whatever reason and cannot afford the home modifications. Without disclosing too much because I know it would embarrass him and he reads this, their charity uses 100% of funds raised for program costs. They publish photos and write up reports of each home they rehab and get that information to people who have contributed to their charity. While not everyone can meet this standard, it gives you an idea of what you could expect for accountability. Talk with Board members and people who have been impacted by the programs sponsored by the charity.
4. See if Board Members or officers are allowed to do business with the organization. Both Board Members and officers of the charity should not do business with the organization in any way. While they are both paid for their work with the charity in some cases, they should not do business with the charity for personal gain. At the least, make sure these relationships are disclosed to the Board of Directors. The charity should not be the personal piggy bank of Board Members or officers, and as a result should avoid an and all material conflicting interests.
This is what got Wyclef Jean in so much trouble recently. He has a charity that does business as the Yele Haiti Foundation. Wyclef and his pals appeared to have made a lot of money from performances and rents that were paid to them by the Foundation. You can read more about why these expenses and additional “consulting fees” are raising red flags by reading here. Wyclef and his pal actually paid themselves $410,000 for services provided to the Foundation. The Foundation did not file tax returns or provide annual reports for a couple of years. Read about that here. Wyclef of course denies it all. Read that here.
I love Wyclef — he is one of the most talented musicians on the planet. But, I think he skipped Accounting 101 and trusted other people a little too much. 
5. Talk with people at the organization. Ask them lots of questions about the programs they fund. Ask if your money will be going to a capital campaign or directly to program expenses. See how open they are with you and generally, what “vibe” you get from them.
While this is just an overview of some of the steps I recommend in helping you determine where your money will go, there are other resources out on the Internet to help you look into charities in more detail. Please do your research. Please find a charity that has priorities and goals that meet your personal beliefs. Your money is important to these organizations and with the support of people like us, they would not be able to function.
Just make sure your dollar doesn’t go to waste.

About the Author

I have been participating in running and triathlons for 10 years and love the feeling that training provides. You may not agree with me, but you know you just can't look away...