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Five Steps Ensure People Donate to the "Right" Charity, Particularly in the Wake of Typhoon Haiyan

WASHINGTON, DC--(Marketwired - November 14, 2013) - It's the time of year when many people donate hard-earned money to charities, and it's also the time when nonprofits increase their fundraising appeals to take advantage of the spirit of the season. When faced with so many solicitations, particularly in the wake of a natural disaster like Typhoon Haiyan, how can donors be sure that their money goes to the "best" nonprofit? The task of finding the highest-performing charity to support can be daunting, but it doesn't have to be.

"It comes down to one word: research," said Lindsay J.K. Nichols, GuideStar's communications director. "Taking a few minutes to look into the nonprofit that piques your interest before you donate can go a long way when it comes to making sure you are giving to the right charity."

GuideStar, the leading source of nonprofit information, offers the following tips to help you get the most out of your end-of-year charitable giving:

1. Clarify your values and preferences.

What do you value? Do you have an artistic streak? Do you love animals? Do you want to support health research? Consider the type of charity that you'd have the best connection with -- small or large; new or old; local, national, or international.

2. Focus on the mission.

Make sure a nonprofit has an easy-to-understand mission that aligns with your principles and beliefs. You can look up a specific nonprofit in GuideStar's database of more than 1.8 million organizations, or use the advanced search to find charities by category, size, and location. The mission should also be easily found on a nonprofit's Web site.

3. Verify a charity's legitimacy.

Let's face it: there are sham nonprofits out there, and some charities that used to be exempt are no longer, because of the Pension Protection Act of 2006. Verifying that the IRS currently recognizes a nonprofit as a tax exempt organization is imperative. A glance at a nonprofit's report on GuideStar will answer this question.

  • If the charity is not on GuideStar, ask to see its IRS letter of determination.
  • If the organization is faith-based (churches and other religious nonprofits are not required to file with the IRS), ask to see its official listing in a directory for its denomination.

4. Get the facts.

Once you find a nonprofit that meets the requirements above, dig a bit deeper. We encourage you to pay attention to factors more relevant to nonprofit performance: transparency, governance, leadership, and results.

  • For transparency, our GuideStar Exchange program is the only initiative of its kind that encourages nonprofit transparency on a national scale and allows nonprofits to supplement the public information that is available from the IRS. We encourage you to look for the GuideStar Exchange Gold, Silver, or Bronze logo, which signifies that those nonprofits are committed to transparency.
  • For governance and leadership, we encourage you to look at the nonprofit's annual report and dig into their leadership. Who sits on the board? How long do board members serve? What do they do on the board? Who is on the nonprofit's leadership team? How long have they served? What is their role? Have they been in legal hot water lately?
  • For results, we recommend that donors look for the Gold GuideStar Exchange logo, indicating that a nonprofit has provided Charting Impact information, which helps nonprofits report on their results in a meaningful, and standardized, way. Check out a nonprofit's impact tab on the GuideStar nonprofit report. Look for Top Nonprofits, chosen by the experts using Philanthropedia's unique crowd-sourcing methodology, and Top-Rated nonprofits by GreatNonprofits, which is the platform that allows real people to review charities, similar to consumer-review sites such as Yelp or TripAdvisor. 

5. Trust your instincts.

Your donation should make you happy! If you have concerns about a charity, don't contribute to it. There are usually multiple nonprofits focusing on a similar mission, so find another nonprofit that does the same kind of work and makes you feel more comfortable. Reputable charities:

  • Are willing to send you literature about their work or direct you to a Web site.
  • Don't use pressure tactics.
  • Take "no" for an answer.

How do you go about doing all of this? GuideStar created a Giving Season Resource Center to help both donors and nonprofits make the most of the giving season this year: http://www.guidestar.org/rxg/give-to-charity/giving-season.aspx. Other resources include:

We are commonly referred to as a watchdog, but the truth is, we're not. We know that donors come to the giving decision with a variety of values, so we want to display as much information as we can about a nonprofit without making judgments on your behalf. When researching a nonprofit, specifically look for transparency, governance, leadership, and results.

Remember that "overhead" -- the ratio of how much an organization spends on administrative costs in relation to its total expenses -- is just one piece of a much larger puzzle when assessing a nonprofit, and it certainly isn't as important as impact.

You can find reviews for many charities from real people who have interacted with a nonprofit on GuideStar and GreatNonprofits.

Be a part of the donation conversation

GuideStar wants to hear from you! Why do you give to charity? Which cause makes you want to act? Post a photo of you holding a sign stating, "IGive4 [cause/motivation] [favorite charity]" on Twitter, Instagram, Facebook, and Tumblr, or send it to photos@guidestar.org -- just be sure to use the hashtag #IGive4. We will highlight as many photos as we can on our Web site and across our social media channels. We can't wait to hear from you! To see what people have already done (and to see a larger version of the photo above), visit our #IGive4 page: http://www.guidestar.org/rxg/give-to-charity/why-do-you-give-to-charity.aspx.

Be a part of something special with #GivingTuesday

If you're going to give to charity, why not be part of a new movement that is changing the calendar and helping make history? On Tuesday, December 3, 2013, GuideStar is joining a day dedicated to giving, #GivingTuesday. We invite you to be part of this national celebration of our great tradition of generosity. #GivingTuesday will show how Americans can do much more with our wallets than just consume. Visit http://www.givingtuesday.org/ to learn more.

"There are truly amazing nonprofits that are working tirelessly to serve their missions," added Nichols. "By taking a moment to research and focusing on a nonprofit's results, you can be confident that you find these nonprofits and put your money to the best possible use." Check out GuideStar's infographic about Choosing a Charity: http://www.guidestar.org/rxg/give-to-charity/tips-for-choosing-a-charity.aspx.

About GuideStar

GuideStar, www.guidestar.org, connects people and organizations with information on the programs, finances, and impact of more than 1.8 million IRS-recognized nonprofits. GuideStar serves a wide audience inside and outside the nonprofit sector, including individual donors, nonprofit leaders, grantmakers, government officials, academic researchers, and the media.

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