“We’re hoping that America, which is already the most generous society on Earth, becomes even more generous over time.”
There are over 1.4 million charities in the United States but not all are legitimate. When you donate, you give from the heart and want your money to be used for what you intended it for. Charity scams can be hard to spot and are often set up as quasi-legitimate agencies that look real. This article (parts 1-3 over three days) walks you through the steps needed to verify if a charity is legitimate and discusses ways to donate safely. It’s great to be a giver — but give cautiously so you’re not enriching scammers or a questionable ‘charity.’
Experts agree that a legitimate and efficient charity should be using at least 50 to 60 cents of each dollar it receives to conduct the actual charitable work and use the remaining funds to pay for administrative, marketing and other operational expenses. To find out how efficient a charity is, you start by checking out the organization with the local charity registration office and with your local Better Business Bureau (www.bbb.com).
You can also check to see the amount of your dollar that goes directly to charitable work on that organization’s required annual Form 990. Charities and foundations are required to complete this form once a year and this information must be made available to potential donors upon request. Many forthcoming charities actually post their financial information on their Web sites.
The specific information on these forms and in a charity’s annual report gives you a good idea of how the charity works, who governs it and where and how it spends money to address its concerns and run its operation. In these reports, you should be able to see the major expense categories, including program services, management/operation and fund raising such as:
- Program service costs – Research grants made to scientists, food sent to feed hungry families or public information brochures aimed at explaining a disease
- Management/operational costs – Expenses associated with the day-to-day operation of the charity, including rent, office supplies and salaries of administrative staff
- Fundraising costs – Printing and mailing of appeals, advertising and fees paid to professional fund-raisers