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We are fast approaching the holidays and that means Salvation Army buckets will be making appearances outside stores across the U.S. But it’s not just the Salvation Army that will be benefiting from the kindness and contributions. As a group, Americans contributed more than $335 billion to various charities in 2013.
For many of us, donating to the less fortunate is just as much a part of the season’s celebration as tinsel and carols. However, don’t let your warm and fuzzy feelings lead you to make bad decisions when it comes to donating.
Watch the video below for some tips from Money Talks News founder Stacy Johnson regarding how to make smart charitable donations. Then keep reading to learn more about what to check before you write a check.
1. Pick your passion
Of course, before you can donate to a charity, you need to find one. Start by considering what fires you up. What would you change about the world? Which injustice would you right if given the chance?
From curing childhood cancer to saving the oceans, there are charities for virtually every cause. Once you settle on your general area of focus, decide whether you want to donate locally, nationally or internationally. If you are concerned about hunger, you could donate to the local food bank or perhaps you’ll feel called to help those in developing countries. It’s your call. There is no right answer.
2. Make sure your charity is legit
After you know your cause, it’s time to find a charity worth your money. You could do a Google search, but you are better off going to a dedicated site like Charity Navigator or GuideStar.
Charity scams can be big business for rip-off artists who prey on others’ good intentions. Some so-called charities aren’t even registered tax-exempt organizations and are simply a front to siphon money into the owner’s pocket.
Avoid being duped by charity scams by double-checking any charity’s credentials through Charity Navigator, GuideStar or Give.org, which is run by the Better Business Bureau.
3. Watch out for excessive administrative expenses
Next, even if your charity is legitimate, that doesn’t mean your money will be used wisely. Before you donate to Kids Wish Network – dubbed America’s worst charity by one report – you probably should know it spends less than 3 percent of its money on actually granting kids’ wishes.
According to the BBB Wise Giving Alliance standards, a charitable organization should spend at least 65 percent of its money on program expenses – that is, activities directly related to its cause. While 65 percent may be the bare minimum, you can find many charities that go above and beyond. For example, consider Feeding America, which spends a whopping 97.9 percent of its budget on program expenses.