Make It Count
We’re giving more these days — but we’re not necessarily being smart about it. Charitable contributions have increased more than 12 percent since the recession ended in 2009, according to Giving USA’s annual report, with the average household donating $2,974 last year. But charity watchdogs say too much of our money is getting swallowed up by unnecessary costs and fees, or going into the pockets of thieves.
Here’s how to make sure your charitable contributions do the most good.
Plan It Out
If most of your donations are made spontaneously, in response to appeals or in order to get end-of-the-year tax breaks, you may wind up benefiting poorly run charities — or outright scams. Spending a few minutes with watchdog sites such as Charity Navigator, CharityWatch, and Guidestar before you give can help you funnel money to the nonprofits that do the most good.
And if charitable giving is important to you, consider making regular donations year-round to your favorite causes so that it’s a built-in part of your budget, rather than something you try to cram in at the end of the year. Some employers even offer payroll deductions for local charities, and many nonprofits have monthly giving options.
Find a Focus
Giving small amounts to a bunch of charities may make you feel generous, but you’re not doing them much good. It costs roughly the same amount to process a small donation as a big one, so the charity gets proportionately less, says Ken Berger, president and CEO of Charity Navigator. (If it costs $2 to process a donation, for example, the charity gets only 80 percent of your $10 donation, but it would get 98 percent of your $100 contribution.)
Plus, those small donations can backfire. Charities may try to boost their “yield” from you by repeatedly soliciting you for more donations or by selling your name to other nonprofits. That means more junk mail and unwanted phone calls.
A better idea is to funnel most of your giving to a few charities that matter the most to you — and ask them not to share or sell your contact information.
Rethink Easy Giving
Donating via text message is fast and simple, but your contribution can take months to get to the charity and the company processing the transaction typically gets a five to 10 percent cut.
Another problematic way to donate: “embedded giving,” where you buy a product that supposedly benefits a charity, or you add a few bucks to your retail transaction to benefit a good cause. There’s not much regulation in this area to make sure the charities actually get the donations.
Don’t Respond to Telephone Appeals
Charities that use telemarketing often hire for-profit fundraising companies to make the calls, Berger says. That means a hefty part of your donation doesn’t even make it into the charity’s bank account.
And that’s actually the best case scenario.
Some callers are scam artists, looking to glean sensitive financial information, including credit card and bank account numbers that they can abuse or sell. If they persuade you to cough up that information, you also may be added to a “sucker list” they can sell to other criminals.