Things to know before you donate to a charity

You are a good, kind person, but before you give to just any charity, there are a few things you should know to help guide your decision.

You are a good, kind person, but before you give to just any charity, there are a few things you should know to help guide your decision.

Mission

Before you donate to an organization, take a few minutes to visit their website to learn more about it. Many charities are run by, or are closely affiliated with, religious organizations. This gives them a great source of donors and volunteers and may make them more effective as a result, but it may have other implications that could affect you. Take time to learn before you give.

Tax deductibility

For many people, even for some who cannot take advantage of the tax deduction, the tax deductibility of the donation is a key factor. For donations to be tax deductible in the United States, entities must be registered with the IRS as 501(c) (3) nonprofit organizations. Other types of organizations are tax exempt, like trade associations, but donations made to such organizations are not deductible to the donor as a charitable contribution.

Administrative costs

A few nonprofits seem to exist only to perpetuate themselves. These might be identified by spending a high proportion of expenses on administration. This information is publicly available and can serve as a guide for choosing a charity. One rule of thumb cited frequently is using 20 percent of revenue or less for administrative expenses. A few, generally small, volunteer-run charities are able to put 100 percent of donations to work in their programs.

Passion

Before you give significantly to a charity, you need to ask yourself if you have a genuine passion for the work they do. If so, you may want to seek to organize your time and resources to be of even greater help to the cause. If the cause fails this test, consider saving your money until you find one that does.

Location

If you are interested in donating money to a cause, you may also want to donate some of your time. In order to do that, the charity — or its work — must be nearby, or in a desirable location.

Devin Thorpe

Devin Thorpe, husband, father, author of Your Mark On The World and a popular guest speaker, is a Forbes Contributor. Building on a twenty-five year career in finance and entrepreneurship that included $500 million in completed transactions, he now champions social good full time, seeking to help others succeed in their efforts to make the world a better place.