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Top 10 Best Practices of Savvy Donors
Be Proactive in Your Giving
Smart givers generally don't give reactively in a knee-jerk reaction. They don't respond to the first organization that appeals for help. They take the time to identify which causes are most important to them and their families. And they are specific about the change they want to effect. For example, they don't just support generic cancer charities, but instead have targeted outcome goals for their giving, such as providing mammograms to at-risk women in their community.
Hang up the Phone / Eliminate the Middleman
Informed donors recognize that for-profit fundraisers, those primarily used in charitable telemarketing campaigns, keep 25 to 95 cents of every dollar they collect. These donors never give out their personal information -- like credit card accounts or social security numbers -- over the phone. If they like what they hear in the pitch, they'll hang up, investigate the charity on-line and send their contribution directly to the charity, thereby cutting out the middleman and ensuring 100% of their donation reaches the charity. To help you investigate charities that solicit you, we include each charity's contact information in the bottom right-hand corner of its ratings page.
Be Careful of Imposters and Soundalike Names
Uninformed donors are easily confused by charities that have deceptively similar names to others. How many of us could tell the difference between an appeal from the National Cancer Center and the National Cancer Coalition? Their names sound the same, but their performances are vastly different. Would you be surprised to learn that the first is a zero-star charity and the second is a four-star charity? Informed donors take the time to uncover the difference.
Confirm 501(c)(3) Status
Wise donors don't drop money into canisters at the checkout counter or hand over cash to solicitors outside the supermarket. Situations like these are irresistible to scam artists who wish to take advantage of your goodwill. If for no other reason than they want to take the tax deduction, smart givers only support groups granted tax-exempt status under section 501(c) (3) of the Internal Revenue Code. All the charities evaluated by Charity Navigator meet this basic requirement.
Check the Charity's Commitment to Donors' Rights
Obtain Copies of Its Financial Records
Savvy donors know that the financial health of a charity is a strong indicator of the charity's programmatic performance. They know that the most efficient charities spend at least 75 percent of their budget on their programs and services and less than 25 percent on fundraising and administrative fees. They understand that a charity's ability to sustain its programs over time is just as important as its short-term day-to-day spending practices. Therefore, savvy donors also seek out charities that are able to grow their revenue at least at the rate of inflation, that continue to invest in their programs and that have some money saved for a rainy day. All this analysis is provided on Charity Navigator's website for free, but when considering groups not found there, savvy donors ask the charity for copies of its three most recent Form 990s. Not only can the donor examine the charity's finances, but the charity's willingness to send the documents is a good way to assess its commitment to transparency.
Review Executive Compensation
Sophisticated donors realize that charities need to pay their top leaders a competitive salary in order to attract and retain the kind of talent needed to run a multimillion-dollar organization and produce results. But they also don't just take the CEO's compensation at face value; they benchmark it against similar-sized organizations engaged in similar work and located in the same region of the country. To help you make your own decision, Charity Navigator reveals that the average CEO's compensation of the charities we evaluate is roughly $140,000. In general, salaries tend to be higher in the Northeast and at arts and education charities. Sophisticated donors also put the CEO's salary into context by examining the overall performance of the organization. They know it is better to contribute to a charity with a well-paid CEO that is meeting its goals than to support a charity with an underpaid CEO that fails to deliver on its promises.
Start A Dialogue to Investigate its Programmatic Results
Although it takes some effort on their part to assess a charity's programmatic impact, donors who are committed to advancing real change believe that it is worth their time. Before they make a contribution, they talk with the charity to learn about its accomplishments, goals and challenges. These donors are prepared to walk away from any charity that is unable or unwilling to participate in this type of conversation.
Concentrate Your Giving
When it comes to financial investments, diversification is the key to reducing risk. The opposite is true for philanthropic investments. If you've really taken the time to identify a well-run charity that is engaged in a cause that you are passionate about, you should then feel confident in giving it a donation. Spreading your money among multiple organizations not only results in your mail box filling up with more appeals, it also diminishes the possibility of any of those groups bringing about substantive change as each charity is wasting a large percentage of your gift on fundraising and overhead expenses.
Share Your Intentions and Make a Long-Term Commitment
Smart donors support their favorite charities for the long haul. Again, they see themselves as a partner in the charity's efforts to bring about change. They know that only with long-term, committed supporters can a charity be successful. And they don't hesitate to tell the charity of their giving plans so that the organization knows it can rely on the donor and the charity doesn't have to waste resources and harass the donor by sending numerous solicitations.