Americans donate nearly $300 billion annually to more than 1.2 million charities and religious groups, according to Giving USA. Most donors believe that they are giving to worthwhile causes, but few conduct the necessary research to determine how effectively an organization uses donations to accomplish its mission. People who wouldn't dream of investing money without performing the necessary due diligence may blindly give money to organizations that use the majority of donations for executive salaries, fundraising and advertising. This is why due diligence is so important before making a donation.
Here are a few tips for vetting a nonprofit before you give:
Align your goals
The first step in choosing a charity is thinking about what you would like to accomplish. If the scope of your aspiration is local, find charities that are based in your neighborhood or city. If you're most concerned about national and global issues, like worldwide hunger or cancer, look for nonprofits that are equipped for such a large challenge. Remember that you can't always judge a big organization by its publicity, since that may just reflect a large advertising budget. Also, be on the lookout for questionable charities that have a name that closely resembles the name of a well-known, legitimate charity; some sound-alike charities are scams.