What to consider when donating on Giving Tuesday

Black Friday and Cyber Monday — the premier retail shopping events of the year — have both come and gone, clearing the way for Giving Tuesday, a promotional holiday used to bolster support and donations for non-profit and charity organizations.

Charity Navigator CEO Michael Thatcher joins Yahoo Finance Live to discuss the rate at which Americans are willing to give away or donate, and assessment criteria to determine whether your donation is going where you want it to go within an organization.

"You want to be smarter when you're giving right now — if you have less to give or you're less sure about where you're going to be giving, be strategic, think it through," Thatcher says. "Use third-party intermediaries like Charity Navigator to actually figure out where to give and then how to give to an organization that's really making a difference

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

JOSH LIPTON: Black Friday sales hit a record 9.8 billion going into Giving Tuesday. But just because consumers are spending this holiday season doesn't mean they're giving. With seemingly endless causes to choose from, it can be overwhelming for donors to know how and where to give. For more on how to navigate Giving Tuesday, we bring in Charity Navigator CEO and President Michael Thatcher. Michael, thank you for joining us.

MICHAEL THATCHER: Josh, really glad to be here. Thank you.

JOSH LIPTON: I'm interested, we talk on this show a lot about some of the challenges that Americans are facing right now, right, so it's higher borrowing costs and elevated inflation. So as we wrap up just 2023, Michael, are Americans giving? Is it the same rate as last year, weaker, stronger?

MICHAEL THATCHER: So giving overall in 2023 is actually down. It's down about 20%. That's what we're seeing on our site. And we're also seeing it from the nonprofits that we interact with. Roughly it's about 20% to 30% declines in giving this year. That said, we're still hoping for a pretty good Giving Tuesday tomorrow.

JULIE HYMAN: And do we tend to see a correlation between consumer spending and giving or how do you think about how it relates to the broader environment?

MICHAEL THATCHER: I think you will see a tighter alignment with how's the economy doing and let's say, consumer confidence in the economy. So if things are we've had higher interest rates, we've had concerns about the economy, that has had an effect on giving. And so it tends to follow fairly closely.

JOSH LIPTON: And so, Michael, if there are folks who maybe are a bit concerned right now, there's some storm clouds brewing, are there ways that they can still give even if they're having to give on maybe a more tight budget right now?

MICHAEL THATCHER: 100%. And I think that's where you want to be smarter when you're giving right now. If you have less to give or you're less sure about where you're going to be giving, be strategic. Think it through. Use third-party intermediaries like Charity Navigator to actually figure out where to give and then how to give to an organization that's really making a difference.

JULIE HYMAN: So one of the things you guys measure is how effectively the money is being spent, basically. What percentage goes to overhead versus actually goes to the cause that the charity is working on? The site's been in existence now for 22 years as we were just talking about in the break. Have charities foundations nonprofits overall. Have they gotten more efficient over time. have you found? Or is there still a big dispersion?

MICHAEL THATCHER: It's a great question. And yes, there's I would say there's a lot more focus on efficiency. But at the end of the day, you really want to know what has my money accomplished, right? So yes, we can look at how much gets spent on a specific line item in the budget. But did the difference get made in the world?

And so what we've been looking at in the way the ratings have evolved and the way a lot of people are thinking about nonprofit giving right now is what is the impact of my donation, and then how do we actually determine that? And I think that's something I'd really encourage folks to look for.

JOSH LIPTON: And, Michael, on your platform right now, I'm curious whether are there certain trends, themes, areas people are giving more to right now?

MICHAEL THATCHER: Absolutely. And again, this similar to global trends. People tend to follow the news cycle. We've had a lot of really difficult and hard things happening in the last year. And so giving tends to follow that. We're seeing there's a large focus on humanitarian aid, international humanitarian aid. You'll also see a focus on the environment, education. These are key areas that always are in the top, you know, it's our cycles are around them, and that's where people are giving right now.

JULIE HYMAN: I'm also curious what you make of, particularly when you're talking about humanitarian aid for the situation in Israel and Gaza, for the situation in Ukraine. There's a lot of disinformation out there, both about the situation itself, but also about the organizations that are on the ground. Do you feel like you-- have you all added information or changed what you're sharing about these organizations to try to correct for some of that?

MICHAEL THATCHER: Part of what we try and do at Charity Navigator is essentially help donors find the organizations that are focused on the causes they care about. So we'll create lists of highly rated organizations that are a good starting point for people. There is disinformation, there is fraudulent behavior. You have to watch out for that. So one thing-- a couple of rules of thumb, make sure it's a real 501(c)(3) IRS registered charity. You can look them up on any of the IRS site, Charity Navigator, any of the intermediary sites.

And then the other thing is how are they actually engaged in the process that you're trying to give money to? And so you want to know that they're actually, they have feet on the street doing the work that you're asking them to do.

JOSH LIPTON: All right Michael, thank you so much for coming in today. We really appreciate that insight.

MICHAEL THATCHER: Excellent. Thanks for having me.