Have you ever been scammed by a fake charity? Or found out after you contributed your hard-earned money that your charity dollars aren’t going where you think they are?
If you’re ready to start using your Freedom Generator’s Charity Bucket, you absolutely want to steer clear of shifty organizations. On top of that though, you want to choose a charity that will maximize the good your money does.
Here are four steps you should follow to ensure that you open your heart—and your wallet—for the right organizations:
1. Start With A Giving Plan
You already know how important a solid plan is in reaching your own financial goals. So it makes sense that you need a strategy in place for your donation dollars to reach their full potential as well.
First, decide how you’ll structure your Charity Bucket. Will you set it up by funding investments with a one-time lump sum amount? Or will you add to your Charity Bucket’s size by a certain dollar value or percentage of your income each year?
Next, get specific about your plan for giving. You can choose one of several approaches here:
- Adopt a yearly focus. Select just one or two charities to receive all of this year’s contributions. Next year, throw your full support behind a different cause that’s important to you.
- See what the world needs right now. Is there an urgent need for aid after a devastating disaster? Do recent news stories inspire you to donate for child welfare or environmental protection? If so, consider putting your money toward a time-sensitive need.
- Choose a catch-all charity. Some excellent organizations cover a wide array of aid. So if you’re looking to end hunger, stop disease and promote literacy, there may be a single charity that will do all of that with your donation.
- Spread it around. Want to save the rainforest, fund cancer research and support veterans? You don’t have to choose! Divvy up your cash across all the causes about which you feel passionate. Choose a ratio that makes sense to you.
2. Check Up On Your Charity’s Financials
Then go into research mode. Fortunately, tracking down the information you need is easier than you might think.
Along with charities’ own literature, Charity Navigator and Guidestar are excellent resources for learning all about the organizational structures and missions of registered non-profits. For each charity you’re considering as a recipient of your donation, find out the following:
- What specific need is being addressed?
- Who is benefiting from the donations? Who isn’t?
- What are the most important goals of the organization?
- What are the charity’s basic philosophies, political leanings, religious precepts, etc.? Do you agree with them?
Perhaps even more importantly, Charity Navigator and Guidestar both gather government-acquired financial details from non-profits. The information is shared for free with anyone who accesses the site, and Charity Navigator even interprets the data for you.
For instance, you can discover just how much money is coming in to a given charity and where the cash is going. Look specifically at the percentage of revenue that’s going to supporting the cause you love vs. paying for executive salaries or donor thank-you gifts. But don’t get caught up in the “overhead myth.” Nonprofits that don’t spend enough on overheard like proper equipment, staff training and marketing are doomed to fail.
Be aware that some areas of aid require more overhead than others. So take a look at Charity Navigator’s own notes and rating system when evaluating the reported financial figures that you see.
3. Ask Questions And Request Updates
Nearly every reputable charity has a dedicated department—or at least a representative—whose sole job is to work with supporters and would-be donors. So give them a call!
Ask every single question you have. Request specific literature. See if you can get your hands on case studies that highlight the successes the organization has made possible.
Once you do sign on to support a charity, make sure you’re kept in the loop. Get on the e-mail list so you learn about urgent needs, special donation matching periods and organizational updates. Keep an eye on the news for any stories—good or bad—about your chosen non-profit.
A great charity understands the value of recurring monetary gifts. So don’t hesitate to pick up the phone and take advantage of your nonprofit’s liaison. Plus, don’t be surprised if you get an occasional thank-you note from your charity in addition to that warm feeling that giving instills!
image credit: Bigstock/nruboc
Dr. Tony is the co-founder of MindShift.money and the best-selling author of three books on personal and business finances. Having achieved Financial Freedom at 27, Dr. Tony believes that through Financially Fit Bootcamp and Cash Flow Cure everyone can get there. He has made it his life’s mission to help others live a life where their money works for them—not the other way around.