Volunteers using checklist of questions to ask when researching a charityWealth brings with it a multitude of opportunities. For many clients, this includes the ability to give back. SageVest Wealth Management always recommends researching a charity carefully before making a donation, and especially when adding it to your longer term philanthropic plans. Research helps ensure that your gift is used in a meaningful and impactful way. Here’s a quick list of questions to consider when researching a charity.

 

 

1) What’s The Charity’s Mission?

  • Is it clearly defined? A vaguely outlined mission may not provide quantifiable or impactful change.
  • Do the charity’s programs directly support its mission? If there’s no cohesive approach, you may not see the results you want.

2) Does The Charity Align With Your Value Set?

  • Does the mission align with what you’re seeking to achieve through your donation?
  • Do the charity’s overarching principles align with your own beliefs?
  • Do they align with your family values? This is especially important if you anticipate a long-term engagement with the charity. Shared family giving strategies are a great way to engage the next generation in family finances and to instill family values.

3) Is The Organization Controversial?

  • Has the organization been in the news recently?
  • Was the publicity positive or negative?
  • Has news coverage impacted the charity’s ability to serve its target population? While it may not sway your viewpoint, it may affect that of others, positively or negatively.

4) Is There A Genuine Need?

  • Does the charity claim to meet a need not otherwise addressed?
  • What research was used to identify this need? There should be reliable, realistic, and factual data revealing the extent of the problem.
  • Where would your donation be most useful? The charity should be able to pinpoint the main obstacles to fulfilling their mission and identify where your investment could best be utilized.

5) Do Other Charities Serve The Same Need?

  • How many other charities are working in the same philanthropic space?
  • To what extent do the groups differ or overlap in their approach to the problem? Online charity rating platforms like Charity Navigator, Guide Star, and Charity Watch use standardized methodology to assess non-profit organizations, making it easy to compare several charities at once.
  • Is the need sufficient that it warrants duplicate organizations?
  • Does the charity willingly collaborate with similar organizations?

6) When Was The Charity Established?

  • How long has the charity been in business? A new charity must compete with the 1.5 million plus non-profits already established in the US [1], and 15-20% of charitable organizations fail during the first 5-10 years [2].
  • Is the charity’s vision sensible, cohesive, and sustainable? Alongside funding and volunteer engagement, lack of vision is one of the most serious obstacles to a charity’s long-term survival.
  • What are their short- and long-term goals? Having both means they’re working to alleviate the need, today and tomorrow.

7) How Big Is The Charity?

  • What impact are you seeking? Grassroots organizations tend to have higher volunteer involvement, a deeper knowledge of a community’s needs, and a large donation can have a profound effect. In contrast, larger organizations may offer efficiencies of scale, a more proven response, and be able to effect change across a broader platform. Ultimately, it’s personal preference, as research suggests there’s little difference in impact, whether you donate to a large or small charity [3].

8) What’s Their Taxable Status?

  • Is the charity a 501(c) organization? Without this tax-exempt designation, the organization may be precluded from Federal, state, or local government grants, putting long-term sustainability in question. Furthermore, your donation may not be tax-deductible, although recent tax reform may have impacted your charitable tax benefit.
  • Does the organization file IRS Form 990 annually? This form provides public information about the organization’s finances. Transparency in annual reporting may be a good indicator of a charity’s trustworthiness.

9) Who Sits On The Board?

  • Does the Board include a balanced cross-section of interested parties? If the Founder’s the Chairman and the other board members are friends and family, this is a serious red flag.
  • Are the board members sufficiently experienced and knowledgeable to be able to drive the organization’s success as a cohesive whole?
  • What’s the board turnover? High turnover of board members (and/or employees) may indicate internal strife.

10) What Results Have The Charity Achieved?

  • What percentage of the identified population has been helped? Data should show this figure rising, not falling.
  • How is success quantified? While many charities find it hard to directly measure impact or outcome, if they don’t measure success, how will you know if your donation is truly making a difference?

SageVest Wealth Management can help you develop a strategic approach to your philanthropic strategy that reflects your values, identifies goals, and considers taxable implications, all relative to your broader wealth objectives. We welcome your enquiries.

References

[1] https://grantspace.org/resources/knowledge-base/number-of-non-profits-in-the-u-s/

[2] https://nccs.urban.org/frequently-asked-questions

[3] https://www.urban.org/sites/default/files/publication/72536/2000497-The-Non-profit-Sector-in-Brief-2015-Public-Charities-Giving-and-Volunteering.pdf

Prepared by SageVest Wealth Management. Copyright 2018.

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