The Importance of Vetting a Charity Before Donating

Americans are, statistically, among the most charitable people in the world. Each year, people across the country donate an estimated half-trillion dollars to different non-profits. While donations may be made once or on a consistent basis, everyone who makes a sacrifice for the greater good hopes their money is being used for an honest and practical purpose. However, not every charity has the integrity or skill needed to put its finances to the best possible use. So, if you are planning to support a charity in your estate plan, you should take some time to ensure that your wealth will be used the way you want.

What to Look for in a Charity

You may want to leave money to a charitable organization when you die. If you have yet to identify a particular charity, there are many factors you should consider.

Choosing the Right Charity to Support

Mission. To find the right charity for you, you may want to do some research online or ask friends and family for recommendations. Ideally, your beneficiary should be an organization that is aligned with your beliefs and working to realize positive results through honest and ethical work.
Form 990. Each year, non-profit organizations file Form 990 with the Internal Revenue Service (IRS). Form 990 provides detailed information about an organization’s mission, finances, and governance.
Annual audits and reports. The IRS routinely audits large charities to ensure they are using donor money fairly and in accordance with their mission statement. While some smaller organizations are not regularly audited, they may still publish regular reports detailing how and where they appropriate donations. This information, especially if confirmed or substantiated by a regulator, could indicate how much of your money will actually go to the organization’s mission, rather than routine expenses.
Results. When reviewing Form 990, audits, and reports, look for indicators of success, such as how many clients the charity serves, how many hours of work it oversees, and the extent to which the organization has grown or expanded since it was established.

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How to Vet a Charity

Review their history, especially recent growth and successes.
Check their online presence, and see how they are regarded by current members, other donors, and watchdogs.
Speak to people who have already given money to the charity or have worked with it in the past.
Consider volunteering yourself, to see exactly how the charity employs its resources and to get a feel for how they actually enact their mission.

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