Marc Zboch has worked with dozens of charities and continuously evaluates others that may interest him or his peers. By working with different organizations and spending time in the field, Marc Zboch understands the difficulties that arise when choosing which charity to support. There are several factors to take into consideration when giving money or donating time. A proper evaluation, however, can be accomplished in minimal time.
What To Look For In An Organization
Donating to a charity, regardless of the cause, can feel good for many people. Those who donate time or money often experience appreciation for other cultures or the satisfaction of giving. Those who are in need also benefit by receiving help, material goods, or education.
To understand how the money is spent and several other key distinctions, a checklist is essential.
What to evaluate:
Any cause will need sufficient funds to operate a charity. Program expenses can fluctuate depending on the mission of the organization. If schools or public education is a priority, program expenses may include classroom supplies, building materials, curriculum guides, etc. A charity that revolves around agriculture may need plants and farming equipment.
Each program should have performance metrics that are easy to track. These performance metrics can be used to dictate financial incentives or to monitor existing expenses. A charity that spends approximately 75% of its budget on programs is usually a reasonable expectation. Charities that spend less than a third of their budget on program expenses are far less common, but they do exist.
Financial reports will generally show three categories, also known as performance metrics, Administrative Expense, Fundraising Expense and Program Expense.
Some charity organizations are affiliated with belief systems that may or may not be a preferable option. Charities can be attached to religious organizations or run as a nonprofit. Depending on the cause and organization, education can be expressed differently.
Educational charities include adult programs and services as well as early childhood programs and scholarships. Many of these programs can advance an individual’s likelihood of success and future income.
Core beliefs may be relevant when giving to a charity. There are certain political charities as well as faith-based organizations that can all channel different educational experiences. Before donating to a charity, researching the organization’s track record is advised.
A tax-exempt organization must be filed with the IRS. Form 990 is an essential tool used to gather information about organizations that do not pay taxes. This form can be shared with the public to describe further financial detail about their organization. Their IRS 990 form is public and can be searched by anyone who may have inquiries.
Financial information that is made public by a nonprofit organization is usually a good sign. This means the charity is transparent about program expenses as well as where it operates. This form can be used to rank charities and nonprofit organizations by detailing the organization’s accomplishments and how it works.
Executive salaries can range from the thousands to the millions. In general, a nonprofit organization typically doesn’t pay their executives a high salary. While the exact salaries are not public, a rough estimate can be found. If a high percentage of the charity’s total revenue accounts for one salary, this can be problematic to the mission or cause.
Board members are not usually paid. While this is a common rule, it is not a law. Some board members can receive a base retainer. Even board members who do not receive a salary can be reimbursed for some of their services.
How To Evaluate A Charity
To choose a charity that aligns with individual ethics and financial benefits, check to see if there is public information available. Tax exemption laws can make this process easier.
Choosing a charity that already has a reputable track record can be helpful. Financial health means the organization is likely stable. This type of transparency can show where the money is going in addition to how it will benefit.
Researching a nonprofit organization is a smart way to evaluate its goals and responsibilities. By identifying who sits on the board of directors, success can be monitored through the organization’s progress. Reviewing the main supporters and leadership is also essential when assessing the inner workings of a charity.
There are many critical ways to support a cause. Researching charities and nonprofits can guide individuals to a charity that they feel confident about. A successful charity is more than just name recognition or the amount of money being raised.
An organization that is supporting a community or cause can change lives. Donating money without first evaluating all the options and financial structures can be quite risky, especially if a charity is overseas. To prevent organizations from potentially abusing their power, donating money to the right charity will help fund those in need while avoiding exploitative organizations.