How much is your favorite charity actually spending on the cause?

via How much is your favorite charity actually spending on the cause? | Consumer Watch, clarionledger.com, 1/10/2013

If you give to a charity, how do you know your dollars are going toward the actual cause you are trying to support? It is easy to get taken in by not only charity scams, but by those who mean well, but just aren’t equipped to do the job. Often, Mississippians’ giving nature is abused by those who are only interested in the fast buck. A lot of charities get attention around the holidays, but now is the real time to take advantage of tax shelters from giving.

And with an unstable economic situation, there are more scammers than ever out there, hoping to separate you from your hard-earned money. However, wise givers know to look before they donate. There are several good ways to do this, if you just have a few minutes to spend online. Here are a few things to look for, and places to find it:

First, look for the all-important spending ratio. This is how much money the organization actually takes in, vs. how much they spend on their stated mission. For example, if a charity raised $100.00 to help hurricane victims, but spent only $50.00 of that helping those victims, that wouldn’t constitute a good job of managing donated funds (assuming that they’re just bad managers, not thieves). However, if a charity which raised that same $100.00, and spent $85.00 of that helping victims, I wouldn’t mind my money going there. Of course, the best investment is 100%, but often, organizations must put infrastructure in place to achieve their mission.

A local example is the Ridgeland-based Goodwill Industries of Mississippi, which helps provide employment to people with disabilities and other barriers. According to a report from the Better Business Bureau, in 2011, Goodwill spent 77.24% of its money actually helping people who need it. In contrast, the Olive Branch-based American Prostate Cancer Research Fund was listed in Secretary of State Delbert Hosemann’s 2012 Charities Guide as giving just under two percent to its charitable purpose in 2010, despite raising nearly $1.6 million for the cause.

Generally, the philanthropic community considers it acceptable for charities to spend no less than 65% of donated funds on their stated cause. A related ratio is the “dollars to fund-raising expenses” ratio. Generally, fund-raising expenses should be kept under 35%, much lower if possible.

Here are a few resources to help you do your research.

  • Secretary of State Delbert Hosemann’s office produces an annual Charities Guide.
  • The BBB Wise Giving Alliance rates hundreds of nationally-soliciting charities, and maintains the BBB Standards for Charitable Donations.
  • Guidestar.org has many resources for donors, including organizations’ IRS Form 990 Tax Forms, which provide a lot of valuable information about the charity.
  • Charity Navigator provides lots of helpful information, including lists of currently-popular charities and how well they stack up in terms of financial accountability.

Ultimately, it’s your dollar. Make sure you do all you can to make sure it goes to help those you want to help.

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