by Sandra Miniutti
- USA -
During the holiday season many of us are deciding which charity to support with our gifts. To help determine which charity is best for you, The WIP Editors are republishing the following article about an independent charity evaluator and how to make the most out of your donations. Please consider a donation to The WIP to support women's voices and global perspectives on relevant issues from around the world. - Ed.
After a short career as a scientist, after many years volunteering and contributing to various causes and after earning a MBA, I decided to leave corporate America for the non-profit sector. My first position was working at a local art, science and history museum. Quickly, I was initiated into the world of non-profit marketing and fundraising. Not many surprises there. We struggled to make payroll while producing quality exhibits and educational programming. The work was exhausting, but fulfilling.
While working at Charity Navigator has expanded my knowledge of the non-profit sector, it hasn’t been as eye-opening as I expected. My years here have confirmed much of what I already knew about charities from my personal experiences and from the non-profit courses I took in graduate school. Probably the first thing I noticed was how telling the financial ratings really are for charities. Of those with which I had a personal connection, I saw my opinions of their programmatic successes or failures reflected in their ratings. Charities that I knew were effective and which had strong, ethical leaders were also efficient and earned high marks via Charity Navigator’s system. On the flip side, charities that I knew could be much more effective showed they had room for improvement in their finances.My time here has also validated my impressions of donors and their relationships with charities. Generous and compassionate donors contact us everyday with their concerns. The root of all of their questions is whether they can trust a charity to put their hard-earned money to good use and also to treat them as a partner in their endeavors to make the world a better place.
One of the biggest disconnects between donors and charities is the way donors are solicited. There is a common misconception in the non-profit world, one that I was urged to follow when I was a fundraiser, that donors must be sent many appeals (seven was the magic number that I often heard) before they’ll make a gift. But if we stop and listen to donors, they tell us just the opposite. Donors want to see their contributions used to support the charity’s programs and services, not to hire someone to coax them into making another donation! Many donors have told us point blank that they will no longer contribute to organizations that send them excessive appeals or trinkets such as mailing labels. That’s not to say that donors do not want to hear from their favorite charities. Rather than asking for more support each time a donor makes a gift, donors want their favorite charities to contact them with information about their accomplishments - even if those correspondences come with a subtle plea for support.
If you share this sentiment, then I encourage you to share your annual giving plans with your favorite charities. For example, if you are only going to send them a gift once a year in December, then tell them that you only want to receive one annual appeal at the end of the year. If the charity can not or will not respect your wishes, find another one that will.
Donor privacy is another area where givers express frustration. No doubt you or someone you love has wound up with a mailbox full of solicitations from charities that you’ve never heard of before. This happened to my mother-in-law, a smart woman with an advanced degree and a fruitful career as an engineer back when women didn’t work in that field. She wasn’t ignorant or gullible, yet this happened to her. How? It started with one charity’s appeal. She responded with a small gift of $10. That charity took her contribution and, as a thank you, promptly sold her name to a dozen other charities. Why? The charity did the math: it was more cost effective for it to sell my mother-in-law’s contact information than it was for the charity to cultivate her into becoming a high-end donor.So, what can you do to prevent this from happening to you? First, stop spreading your money thin. If you have $200 to give this year, divide it up between two charities (that you’ve thoroughly researched) rather than ten or twenty charities. Second, only support charities that promise not to sell or trade your contact information. And if you only have $25 to give, don’t despair, just make sure you give it all to one group that will protect your personal information.
Philanthropy is changing as we move into 2008 and beyond. Technology is playing an increasingly important role in alleviating donors’ fears. Not only can donors quickly tap into Charity Navigator and check up on a charity’s fiscal health, but today they can give online and see their dollars in action via videos and progress reports. Of course, this is especially vital in international giving, as most donors lack the means to travel abroad and see first hand either the issues or the charities at work in the field. Online tools really began to take off after the tsunami in 2004. Online giving helped donors respond immediately and thus enabled the charities to quickly mobilize a response. Shortly thereafter, charities began uploading images and stories of their progress. They really treated new donors as partners and worked hard to cultivate their trust. Today, we see more charities accepting online gifts and testing out new communication tools like videos to make their needs more tangible to prospective donors and to articulate their accomplishments more effectively.
I know many of you reading this article are planning on making gifts this holiday season. So I’ve boiled down what I’ve learned into the following 10 tips to help you make the most of your holiday donations.
1. Be Proactive in Your Giving This is my all time number one tip – don’t wait for a charity to contact you. Be proactive in identifying the causes that you are passionate about and then take the time to identify well-run charities doing that work (more on this below).
2. Be Specific
Smart givers are very specific about the change they want to affect. For example, they don’t just support ‘Africa’ - they focus on building a school in a specific country.
3. Hang Up the Phone
Not only is it risky to give out your personal information over the phone, but your donation will not go very far in helping the charitable cause. Why? Because for-profit fundraisers, those primarily used in charitable telemarketing campaigns, keep 25 to 95 cents of every dollar they collect! If you like what you hear in the pitch, hang up, investigate the charity on-line and send your contribution directly to the charity, thereby cutting out the middleman and ensuring 100% of your donation reaches the charity.
4. Be Careful of Imposters and Sound-Alike Names
Would you know the difference between an appeal from the Children's Charity Fund and the Children's Defense Fund? Their names sound the same, but their performances are vastly different. If you give the Children's Charity Fund $100, it will only spend $20 on its mission. On the other hand, the Children's Defense Fund will direct $83 of your $100 gift towards its mission. Take the time to uncover the difference.
5. Confirm 501(c) (3) Status
For American donors who want to ensure that their philanthropic endeavors qualify for a tax-deduction, it is imperative that you make sure the groups you support have been granted tax-exempt status under section 501(c) (3) of the Internal Revenue Code. (All of the charities evaluated by Charity Navigator meet this basic requirement.) Many international charities have gone through the trouble of setting up a US office and registering with the IRS so that they can offer the same tax benefits to donors as domestic charities.
6. Check the Charity's Commitment to Donor's Rights
7. Obtain Copies of Financial Records
The financial health of a charity is a strong indicator of the charity's programmatic performance. The most efficient charities spend at least 75% of their budget on their programs and services and less than 25% on fundraising and administrative fees. And financially healthy charities are able to grow their revenue at least at the rate of inflation, spend more on their programs each year and have some money saved for a rainy day. All of this analysis is provided on Charity Navigator's website for free, but when considering groups not found here, savvy donors ask the charity for copies of its three most recent Forms 990. Not only can the donor then examine the charity's finances, but the charity's willingness to send the documents (which by law it is required to do) is a good way to assess its commitment to transparency.
8. Review Executive Compensation
Of the more than 5,000 charities we’ve evaluated at Charity Navigator, we’ve learned that the typical CEO earns about $145,000. Though this might sound shocking, I for one would rather support an organization that produces results and pays its CEO a decent salary than a group with an unpaid CEO that makes no progress against its goals. Charities really do need to pay their top leaders a competitive salary in order to attract and retain the kind of talent needed to run a multi-million dollar organization and produce results.
9. Start a Dialog to Investigate Its Programmatic Results
Before you make a contribution, talk with the charity to learn about its accomplishments, goals and challenges. Great charities are eager to take these calls, so you should be prepared to walk away from any charity that is unable or unwilling to participate in this type of conversation.
10. Concentrate Your Giving and Make a Long-Term Commitment
When it comes to financial investments, diversification is the key to reducing risk. However, the opposite is true for philanthropic investments. If you've really taken the time to identify a well-run charity that is engaged in a cause that you are passionate about, you should then feel confident in giving it a donation and sticking with it over the long haul. Spreading your money among multiple organizations not only results in your mail box filling up with more appeals, it also diminishes the possibility of any of those groups bringing about substantive change as each charity is wasting a large percentage of your gift on fundraising and overhead expenses.
The best thing about working at Charity Navigator is that the data really does substantiate my hypothesis that the vast majority of charities really are well-run. By following my tips you’ll be sure to invest in a charity that you not only care about but that is also truly effective in making the world a better place.
All images appear courtesy of Charity Navigator.
This article originally appeared on The WIP December 6, 2007.
About the Author
Sandra Miniutti is Vice President for marketing and CFO at Charity Navigator, where she has worked since 2002. Sandra is responsible for all aspects of Charity Navigator's brand, partnerships, media relations, communications, outreach and data sales.
Sandra received her Bachelor's of Science degree in Marine Science and Biology from the University of Miami and a MBA from Rutgers University. She helped develop the business plan for the non-profit GlassRoots. Based in Newark, an economically depressed city in New Jersey, the mission of the charity is to provide area youth with opportunities to create glass art, and develop entrepreneurial and life skills. She is now a member of their Board of Trustees. Sandra regularly appears on television, radio, and in print, commenting on the non-profit sector.