What is wise giving?
As much as we all wish it did, money doesn’t grow on trees. When
we spend that money, we should do our best to use it wisely – that goes for
purchases and donations. We’re told that we should read a contract before
signing it and to read return policies before making purchases. At least when
we make purchases, we know whether we received what we paid for and can address
any issues with the company. Donations are a bit different; we give hoping that
a charity will be an accountable steward of our hard-earned money but may only
receive a thank you and annual report in return.
To ensure that your donation makes the impact you are hoping for
and avoid disappointment, it is increasingly important to give wisely.
But what does it really mean to “give wisely”? In a nutshell, giving wisely is
asking questions and doing research into the organizations asking for your
support. It’s so much more than just asking “how much goes to your cause?”
Many donors don’t even know where to start their research or what
questions to ask. Better Business Bureau and BBB Wise Giving Alliance report on
thousands of charities, both local and national, to help take the guesswork out
of giving. Our charity evaluations focus on 20
Standards for Charity Accountability, taking a deep dive into adequate
board oversight of operations, how funds are spent, appeal accuracy,
accomplishment reporting and transparency. These standards suggest best
practices that go above and beyond legal requirements and provide a framework
that encourages a charity to be the best possible steward of the donations it
The most important tip we can offer is to verify an organization’s
trustworthiness before making your contribution. Check out bbb.org or give.org to find our Charity Review reports.
There are other charity watchdogs but the criteria and evaluation processes
differ; learn about our differences here. If the
charity you are researching doesn’t have a full evaluation, here are some recommended
questions to ask to help you make an informed giving decision:
- How involved is your board of directors? How
many of these board members are directly or indirectly compensated by the
organization? Are there any current transactions with board member affiliated
- How does your organization measure its own
effectiveness and build a plan of action to better achieve its goals?
- May I have a copy of your most recent
financial statements, IRS Form 990, and annual report?
- What percentage of your expenses is spent on
programs? How much of your fundraising revenue is spent on fundraising?
- What information does your organization
collect about its donors? How is this information used and how is it protected?
- What will you do with my donation and where?
These questions represent only a fraction of those BBB ask (and
substantiate the answers to) while evaluating charities. It is important to get
a complete picture of how an organization operates, as a lot of possible issues
can hide behind financial ratios used as the sole measurement of performance.
Let’s take wise giving a step further. You now have a foundation of
questions to ask a charity. To ensure that your well-intended support isn’t
taken advantage of, here is a reminder of what to watch out for:
- Listen for details. Mistaken
identity is a common issue, so get the organization’s exact name and contact
details. Often, scammers will spoof the names or logos of well-known and
- Avoid on the spot pressure. Excessive
pressure may be a tactic to reduce your likelihood to research before a
donation. Ask telemarketers how much of a donation over the phone would be
received by the charity they are calling on behalf of – it may be less than you
think. Resist door to door solicitors – most charities don’t fundraise this
- Be weary of heart-wrenching appeals. It is
important to know what a charity is doing to help their cause. A sob story
appeal with little information on how their programs will help the issue should
- Listen to the red flags. Run from a
“charity” that will not provide an IRS Form 990 upon request. It’s legally
required that they provide the 990 when asked. Legitimate organizations value
transparency and willingly share information with inquiring donors. Be cautious
with any organization that won’t share specific information about their
programs, board, or financials.
- Beware of false signals of trust. You can’t
trust everything you find online. Celebrity endorsements, rankings in a search
engine, and unverified social media posts may be false indications of
- Dismiss the Overhead Myth. Bold claims
of 100% of expenses benefitting programs are usually inaccurate and misleading.
Overhead costs (administrative and fundraising expenses) are necessary and
important expenses that should be reported properly. They shouldn’t make up the
bulk of an organization’s expense but ultimately, overhead should not be the
primary measure of performance.
Want to support a charity but don’t have an organization in mind? BBB
Accredited Charities meet our rigorous standards and can be trusted to be an
effective and accountable steward of your donation. BBB can help you find an
accredited charity near you.
Whether you give time, talents, or treasures, your
generosity is appreciated and will make a difference in the community. As we
roll into the season of food drives and donation bins for coats and blankets,
join us next week for insight into the benefits and draw backs of giving
in-kind verses monetary donations this holiday season.
Give wisely – start your search at bbb.org or give.org
before making your next donation and give with confidence.