3 Smarter Ways to Give Back

Inspired by my frugal but generous parents, I started giving to charity as a young adult and I am not alone: ​​a Study 2013 confirms that the donation behavior of parents influences their children. At first, I followed their lead and donated to my church, local panels, and charities like The Salvation Army. But it wasn’t until I started working at nonprofit radio stations that I began to wonder where that money actually went.

As a result, I began investigating the organizations I was sending my dollars to more closely, sifting through reports detailing income and expenses. I discovered websites such as Charity Navigator and the Better Business Bureau Wise Giving Alliance who provide objective reviews and other resources to help donors make informed decisions.

While these charity guardians vary slightly in their criteria, I’ve learned that donors should pay attention to two important details: how much of the nonprofit’s total income goes directly to its mission (65-75% is ideal) and the percentage that spent on fundraising (generally no more than 35%). In a changing charity landscape, it’s more important than ever to spend your money wisely.

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American giving evolves

Today, charitable giving is changing: COVID-19, growing income inequality, and societal factors have transformed the way Americans give. Giving USA 2022: The Annual Philanthropy Report for 2021, found that Americans donated an estimated $484.85 billion to approximately 1.5 million U.S. charities last year. That’s a 4% increase from the previous year and “ties closely to the events of 2020, a historic year that included a global pandemic, economic crisis and recovery, efforts to advance racial justice, and an unprecedented philanthropic response,” notes Laura MacDonald , CFRE, Chair of the Giving USA Foundation and Director and Founder of Benefactor Group, a financial services organization for nonprofits.

The report also shows that donations from individuals, the main source of all charitable donations, fell below 70% of the total for the fourth straight year in 2021. At its peak 40 years ago, it was 83%. A move away from traditional means of giving explains part of this shift, says Una Osili, Ph.D., associate dean for research and international programs at the Lilly Family School of Philanthropy.

“During the pandemic, we’ve also seen an increase in people’s willingness to donate,” Osili notes. This includes supporting local businesses by paying for services they don’t use themselves (an example Osili cites is booking an Airbnb as temporary housing for Ukrainian refugees) or sending money directly to a friend who has a financial boost needed. Social media is playing a growing role in this, with about a third of Americans donating to charities through crowdfunding sites like GoFundMe rather than directly.

A decrease in providing spells to charities

At the same time, however, a worrying trend is emerging: the stock of Everyone Americans who participate in charitable giving have dropped to about 50%. “More Americans used to give than voted, but that’s not the case anymore,” says MacDonald. “And that’s worrying for a number of reasons. One is that if the “everyday household” does not donate to a charity on a regular basis, it is unlikely that they will start giving as they get richer, or add a charity to their estate plan. ”

“We need to make sure that giving continues to be a part of our communities.”

This shift is fueling fears in the philanthropic community that the average American is being decoupled from charities. “For much of our history, giving has been very broad—all different income levels, races, and ethnic backgrounds have participated,” says Osili. “We need to make sure that giving continues to be a part of our communities.”

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Know where your money goes

In this changing landscape, one thing remains more important than ever, especially for individuals who are donating from tighter wallets than in years past: It’s important to follow Federal Trade Commission‘s advice and think first, send money later.

To find the best charities to donate to, start by asking yourself what really matters to you, what issues are keeping you up at night, or what topics your kids are talking about. Then search online for any topic — like homelessness or racial justice — and add words like “charity,” “evaluation,” “evaluation,” and yes, “scam.” For example, if you google “homelessness,” “charity,” and “review,” you’ll see the Charity Navigator with a list of nonprofits working on this issue, their rating, and a link to an in-depth analysis of the finances and impact of the charity, among other actions. If you are considering donating to a crowdfunding site, make sure you know (and trust) the person posting the purpose and soliciting contributions, as crowdfunding sites do not verify where the money is going. If it’s a non-profit organization, list its name on the testing organizations’ websites as well.

Watch your way of giving

Donations should never be made by bank transfer or gift card; Be extremely cautious when a charity asks for cryptocurrency. Stick with paying by check or credit card, and if you’re doing this online, make sure the web address has “https” in it when you enter your billing information. This allows you to track your bank statements to confirm that you are only being billed for the promised donation amount. And if you’re being stalked by unsolicited requests, report to the FTCs National Do-No-Call Registry; There you can also report those who do not follow your wishes.

Use your online resources

Finally, you should know that a number of organizations are here to help you determine if a charity is using funds in the way the donors intend. Using at least one of the following organizations may enhance your research:

  • That IRS You can verify that donations to a charitable organization are tax deductible when you list them on Federal Form 1040 Schedule A (for example, some political donations are not).
  • See if your state has one charity regulator, to ensure that the non-profit organization is registered to conduct business there; This is particularly important to weed out unscrupulous phone and postal objections.
  • Charity Navigator “Hot Topics” Page lists natural and man-made causes in the news and organizations that deal with them, which are deemed “extraordinary at what they do” and where your dollar “will go the furthest.”
  • Search the database GuideStar, now part of Openfor Form 990s, look for income spent on programs versus fundraising, and also to find nonprofits by name or location.
  • The BBB Wise Giving Alliance Tips for donors covers a range of fundraising categories including car donations, sweepstakes and child sponsorships.

“Donors have the opportunity to make a difference in their own neighborhoods and communities,” Osili assures, not only with money but also with time, talents and votes. “Being part of the solution to the problem can offer a lot of decision-making power during this very turbulent time that we live in.”

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