Which charitable organizations you decide to donate to will be based partly or largely on what types of issues, projects or programs they support. But you should also collect information on their financial solvency and determine how much money they collect is devoted to grant-giving rather than to their overhead expenses. It's also advisable to check to see whether the nonprofit you're considering contributing to files timely and appropriate disclosure documentation to the IRS to prove that they are entitled to---and are not in danger of losing---their tax-exempt status.
Look for websites that analyze charitable organization's performance to help determine how well they're run and how much of your contribution will support the cause you care about. You don't want most of your money going toward a charity's operating expenses. One such "watchdog" site is CharityNavigator.org, which analyzes and rates more than 5,400 nonprofit organizations, based on executive pay, efficiency, organizational capacity, and how much they take in goes to pay for administrative, fund-raising and program costs. Another site, GiveWell.net also discusses how programs work and their impact on the people they serve. A third site, the American Institute of Philanthropy, lists "top rated charities," singling out those that "spend 75% or more of their budgets on programs, spend $25 or less to raise $100 in public support, do not hold excessive assets in reserve."
Learn which sites post financial information provided by charitable organizations that you might be interested in supporting. Many nonprofit, charitable organizations are required to provide the Internal Revenue Service with information on their missions, programs and finances, including how much they've received in contributions and how much they've given in the form of grants, the Guidestar nonprofit foundation information website explains. This information is listed in IRS Form 990, 990-EZ and/or 990-A. Guidestar, the Urban Center's National Center for Charitable Statistics and the Foundation Center post on their websites the 990 forms of all organizations that are required to submit them to the IRS.
Look for journalistic sources of information on charitable organizations' priorities, activities and outreach. In addition to examining individual organizations' websites, the Foundation Center and many other organizations publish descriptions about and the latest news from and about charitable organizations. A major source of current philanthropic trends and activities is the Chronicle of Philanthropy, which both covers and serves the nonprofit sector. If you already have an idea of which charitable organization you'd like to learn more about, search for its website on the Internet by the organization's name. Many of them post annual reports disclosing their mission and activities and relevant financial information on their websites.
If you want to contribute to local causes, contact community organizations directly to learn about them because they may be too small and give away too little money to be picked up by charitable organization watchdogs, information outlets such as the Foundation Center, or even the IRS. Some religious and educational organizations aren't required to file form 990s, for example. These organizations may permit potential donors to conduct "site visits and interviews with charity staff members" for information, Shelly Banjo advises in a Nov. 8, 2009, Wall Street Journal article. In addition, the Council on Foundations provides a community foundation locator search engine searchable by state on its website.
- It would be best to examine an organization's 990 forms over three consecutive years rather than just one, to get a solid idea of how stable its funding sources are likely to be, the Nonprofit Coordinating Committee of New York advises.
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