Broker Check

Feeling Charitable? Steps To Take Before You Write That Check

| September 05, 2017
Share |

I may be biased, but I believe that most Americans are inclined to be generous. According to the National Philanthropic Trust, in 2016, Americans gave away $389 billion, with 72% of that coming from individuals.

As kids we start this “journey of generosity” by participating in car washes, bake sales & walkathons to raise money for all kinds of projects, and when we’re older, we attend charity auctions, tithe at our church or synagogue, or remember our favorite charity in our will. The opportunities to “give back” in this world seem to be endless. But as we intuitively should know, not all charities are created equal. If we want to be sure our charitable dollar is making the right impact, here are a few steps to consider taking:

  1. Examine the charity’s mission statement, available either on their website, printed annual report or their Form 990 tax return (go to: guidestar.org). Is their mission is aligned with your interests and values? Effective philanthropy starts with having a clear purpose.
  2. Review the charity’s financial information. Verify its tax-exempt status. If they have a profile on The Giving Partner website you can examine their budget, audited financial statements and tax return. Is the information provided fairly recent? Does their balance sheet contain enough cash and are assets greater than debts? Are they operating in the black? What percent of their budget is spent on programs vs. administrative costs? Look for these signs of financial health, so you know your donation will be a good “investment.”
  3. Understand the organization’s sources of funding. Does it rely heavily on donations, and if so, does it have broad support or are there just a few major donors? Try to assess the financial viability of the charity from these sources.
  4. Look at the outcomes of the charity’s work, which should be documented and updated annually. Understand who the charity has served, how they provide services, and if the number served is increasing over time. Great nonprofits should make a lasting impact on the clients and the communities they serve.
  5. Determine the charity’s reputation/ratings by going to Charity Navigator’s website or if you are supporting a global organization, Charity Watch. You may even be able to read some testimonials on their website.
  6. If you are making a significant donation, you should probably meet with the organization’s leadership and understand their qualifications to run the programs they do. Consider their tenure with the organization. Is the management stable and effective?
  7. Understand who serves on the non-profit’s board of directors: are they community/business leaders who can support the organization well? Is the board the right size for this charity? If you are considering joining the board, consider meeting a few board members, and perhaps “audit” a board meeting first.
  8. Determine other ways you can help the charity besides providing financial support. Sometimes volunteering with one of its programs will provide help they truly need, and also allow you to learn more about the organization - from the inside out.

Once you’ve made a charitable commitment, congratulate yourself for giving to a worthy organization. You’ve joined the good company of millions of Americans who “make a difference” every day!

Content in this material is for educational information only and not intended to provide specific advice or recommendations for any individual.

Karin Grablin, Certified Financial Planner®, CPA, MBA, is with SRQ Wealth, 1819 Main Street, Suite 905 in Sarasota (941-556-9004; [email protected]). Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through SRQ Wealth Advisory, a registered investment advisor. SRQ Wealth and SRQ Wealth Advisory are separate entities from LPL Financial.

Share |