How to Check Out a Charity Before You Give
Now that you've filed your 2011 taxes, visit these websites so you donate wisely when making your 2012 contributions
I’ve been thinking a lot about my charitable contributions recently, since I just filed my taxes.
As I reviewed the charitable deductions on my 2011 return, I thought of negative news stories I'd read not long ago about three prominent charities, and it made me wonder whether the groups that received my money were spending it wisely. I suspect you may have the same question about your own charitable donations.
Lately I’ve used these sites both to read up on charities in the news and to check out my personal favorites. (I learned that one of my preferred charities had failed to provide requested information to two of the sites, so I’m now considering switching to a more transparent group.)
You don’t have to use all three websites to do your charity research — one may be plenty. But if you don’t find a particular charity in the source you select, you should try one of the two others.
Here’s a rundown on the three free charity watchdog sites:
Charity Navigator rates 10,000 charities, focusing on their financial health, accountability and transparency. It’s a fun site — you can spend hours browsing its top 10 lists, which include the best charities, celebrity charities (think Michael J. Fox and Lance Armstrong) and those most routinely in the red.
The site has a four-star rating system, with the full four going to charities that earn grades of 60 or higher (the top score is 70). This makes it easy to compare charities with similar missions. And in case you don’t know the names of nonprofits comparable to the one you're researching, Charity Navigator lists some at the end of each review.
At Charity Navigator, Susan G. Komen receives four stars, Invisible Children gets three, and Central Asia Institute has a “donor advisory” (Charity Navigator's response to the negative news stories about Mortenson's nonprofit), which supercedes any rating.
The BBB reviews 11,000 charities, looking at how they spend their money, their truthfulness, their willingness to disclose basic information to the public, and how well they're run.
According to this site’s basic rule of thumb, a charity's fundraising costs should not equal more than 35 percent of its total expenses, and at least 65 percent of the group's money should be spent on programs. Komen meets this standard (BBB calculates that fundraising accounts for 8 percent of Komen's expenses; programming, 84 percent). Neither Invisible Children nor Central Asia Institute is rated because both failed to respond to BBB’s requests for information.
I have one small gripe about this site: Every time I tried to research a charity, I was asked for my location. That’s annoying.
A valuable clearinghouse that provides access to vital public information about charities, Guidestar has the tax returns of all 1.8 million nonprofits that file with the IRS.
Guidestar also rates charities for their transparency, awarding a Guidestar Seal to those that cooperate and answer its questions.
But beware: The Guidestar Seal doesn’t necessarily mean that a group uses its money wisely or that there is no wrongdoing associated with it. The seal simply indicates that the charity has answered the dozens of questions Guidestar asked.
Komen and Central Asia Institute have the Guidestar Seal; Invisible Children does not.
Guidestar also lets you share reviews about a charity after you log in.
A Charity Watchdog That Charges
If you want even more information about large U.S. charities than these three sites offer, consider sending $3 to CharityWatch(formerly known as the American Institute of Philanthropy) to receive its Charity Rating Guide of roughly 600 groups.
The CharityWatch guide, published three times a year, provides detailed information about nonprofits it rates and gives each a grade from A to F based on three factors: the percentage of money spent on its charitable purpose, fundraising costs, and the size of the group’s cash reserves.
Although the guide itself is not available online, you might want to spend some time at CharityWatch’s Hot Topics area, which includes the watchdog’s take on charities in the news as well as its lists of top charities.