What Charity Should I Donate To?

When you finish checking out at the grocery store, and the cashier asks you if you’d like to donate a dollar to so-and-so charity, do you ever wonder where that donation really goes?  

Well, if you do, you’re not alone. And for good reason – in fact, some charities spend a good portion of their donations on things totally unrelated to the cause.

So, if you’ve ever wondered ‘what charity should I donate to?’ – and how your donation money is spent afterwards – we’ll explain how to find some answers and narrow your search.

How to Choose a Charity

First and foremost, you need to determine what mission is close to your heart.

Some common charity missions involve:

• Helping people with a particular disease (ex: The Children’s Cancer Research Fund’s goal is to find a cure for childhood cancer)
• Animal charities (ex: The Wildlife Conservation Society works to save wildlife and wild places through conservation action and science)
• Environmental charities (ex: The Acadia Center works to advance the clean energy future through research and advocacy)
• Arts, culture, and humanities charities (ex: NPR distributes noncommercial news, talk, and entertainment programming)
• Education charities that help make learning possible (ex: The Barbara Bush Foundation for Family Literacy focuses simultaneously on early childhood education for preschoolers and adult literacy for their parents)
• Helping the homeless (ex: The National Alliance to End Homelessness analyzes policy and develops pragmatic, cost-effective policy solutions to help end homelessness)
• Religious charities (ex: Urban Youth Impact offers programs designed to develop critical life-skills that result in less juvenile crime, fewer teen pregnancies, less substance abuse, less child abuse/domestic violence, and fewer school drop-outs with an overarching goal of helping these people fulfill their God-given purpose)

There are many more charitable missions, such as food banks, social services, civil rights groups, technology research, public policy research, and affordable housing just to name a few.

Once you determine what mission is important to you, it can be worth looking at the scope of impact of that charity.

Are you more interested in helping those locally or are you interested in contributing to a wider-reaching cause that helps the nation, or even the world?

For example, a charity that helps fight cancer might make a global impact – perhaps they’re trying to find the cure – or it could make a local impact, such as providing services to those in your community.

This can help narrow down your search.

So, at this point, you need to make two important decisions:

1. What mission is close to your heart?
2. Would you rather make a local, national, or global impact?

Right now, there are no “wrong answers.” You’re simply pinpointing what kind of charity would mean the most to you.

From here, you can do some online research, such as a simple Google search (ex: local charity that helps veterans), or you could do some searches using a charity database, such as Charity Navigator.

Next, you need to do your research.

Researching Your Charity

There are some major questions you need to ask before you ever donate to a charity.

I know it can feel like you’re being unnecessarily skeptical, but there are charities out there that don’t use much of your donation for their actual purpose – and you should know this before you ever donate.

So, what questions should you research before you ever donate to a charity?

1. Are they actually a public charity?
2. What do their finances look like?
3. How much of their budget goes toward admin costs?
4. How much of their budget goes toward the actual objective/goal?
5. How do you know they’re reaching their goal?
6. Is there transparency – monthly reports, “state of the unions” on the health of the charity, etc.?

Is it a public charity?

To find out if your charity is a real, public charity, all you need to do is ask for the organization’s EIN (Employer Identification Number). Alternatively, you can search the charity on Charity Navigator – all of the charities on the site meet this basic requirement.

Then, you need to research their finances.

What do the charity’s finances look like?

If the charity is on Charity Navigator, you can actually get a quick breakdown of their financial status. Charity Navigator uses a scoring system, where 100 is the best and 0 is the worst.

The financial information is taken from the most recent tax documents (these are available to the public).

In the above example, you can see that the total score is 83.64 out of 100. To learn more about why the score is anything less than 100, you can view a breakdown of how the charity actually spends their money.

This is when we answer our next couple of questions:

1. How much of their budget goes toward admin costs?
2. How much of their budget goes towards the actual objective/goal?

How much of the budget goes towards admin costs vs. the charity’s mission?

In this example, we see that this charity spends almost 18% of their finances on administration costs. About 12% goes to fundraising expenses, and nearly 70% goes to the actual objective of the charity.

In a perfect world, there wouldn’t be any admin costs, but in most cases, this is necessary. A general rule of thumb is that anything less than 15% is great, while anything over 30% is… not so great.

However, you do need to consider the charity’s mission and factor that into your final assessment.

Finally, when you take a look at whether the budget is going towards the actual purpose of the charity, you’re looking for a number over 85%. If 85% of the charity’s funds go towards it’s goal, that’s ideal. If it’s anything less than 50%, you should look into other charities.

Next, you need to find out if the charity is actually reaching their goal. If they’re spending a ton of money on their goal, but they’re     not actually getting anywhere, that’s a red flag.

How do you know the charity is reaching its goal, and is there transparency?

One way to check in on a charity’s progress is to get annual or semi-annual reports. If the charity doesn't already offer this, it could be a red flag.

For example, Pastor Wray Offermann of St. Paul’s Lutheran Church in Decatur, IL explains, “Every month, there is an elder’s meeting where we take a look at the finances. This information is also available to the entire congregation.”

Additionally, every January, there is what Offermann calls a “State of the Church” address where everyone takes a look at the finances from the previous year.

Offermann explains, “We look at what happened, what goals were achieved, and then we ask ourselves: What do we need to focus more on? Where can we improve?”

The church is completely transparent, and Offermann continues to say that any member of the congregation can simply come into the office and ask for a financial report at any time.

This is the type of transparency you want in a charitable organization. You should be able to know and see the impact of your donations, and if that information isn’t readily available to you, that could be a sign that the charity isn’t worth donating to.

Are there charities I shouldn’t donate to?

Sadly, yes – there are charities you shouldn’t donate to. We aren’t going to roast any one charity, but remember that you’re looking for a charity that makes an impact.

Make sure you go through your research questions and ask for/research the charity’s finances before giving.

There has been a problem with certain charities that spend a ton of money on admin costs – they pay their CEO over half a million dollars or more (among other issues) – and that can feel a bit… unsavory.

You can learn more about this kind of problem in this CBC Marketplace report:

What charity should I donate to?

To sum up, before you donate to a charity, you should be able to answer the following questions:

1. What mission is close to your heart?
2. Would you rather make a local, national, or global impact?
3. Are they actually a public charity?
4. What do their finances look like?
5. How much of their budget goes toward admin costs?
6. How much of their budget goes toward the actual objective/goal?
7. How do you know they’re reaching their goal?
8. Is there transparency?

So, next time someone asks you if you’d like to donate $1 to so-and-so charity, you might actually pause and consider these questions before saying “yes.”