A wide variety of legitimate charitable organizations raise awareness, help those in need and fight for worthy causes. However, the prevalence of charity fraud makes it necessary to use caution before donating your hard-earned money. A common way to protect yourself against scams is to check charity ratings compiled by major watchdog groups. Another benefit of checking ratings is it allows you to compare charities and helps you choose an organization to which you will donate.
Charity watchdogs provide ratings, tips and other useful information. Charity Navigator, Charity Watch and BBB Wise Giving Alliance are three main charity watchdogs. These watchdog groups have an index of charities and keep the public informed about issues related to charitable giving. Using tax form 990s and other financial statements, they rate charities based on how the charities spend their money. The groups also rate them based on transparency, which is the organizations' willingness to provide information.
Navigating Watchdog Websites
When you visit a charity watchdog website, you have a few options to begin checking out charity ratings. The search features allows you to enter the name of a specific charity to find its rating. If you don't have a specific charity in mind, the browse feature lets you search by categories such as environment, education, religion and animals. Other options to search for ratings include browsing lists of top-rated charities, browsing an A to Z directory and browsing by overall ratings.
Viewing Detailed Information
In addition to viewing the total rating of a given charity, browse the detailed information that contributed to its rating. Watchdogs report total revenue as well as a ratio of how much money went to toward program expenses and how much went to administrative and fundraising costs. A sign of a good charity is that it spends no more than 25 percent on administrative and fundraising expenses combined. This means the organization puts 75 percent of what it takes in toward actual programs.
Drawback of Charity Ratings
The primary drawback of charity ratings is that newer or lesser-known charities may not have ratings. This doesn't mean the charity isn't a worthwhile, efficient organization. Many charity watchdogs require several years of tax returns before rating a charity. If the charity you're looking for isn't rated, contact the charity directly and ask for a copy of financial documents showing how the charitable funds it takes in are distributed.