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When choosing a charity, donors should think about their donations the same way they think about personal investments. They can invest based upon hunches. They can invest based upon tips from friends and co-workers, or they can research—do their due diligence—and give intelligently.
Many donors look at overhead—program spending versus administrative and fundraising costs—in making their giving decisions, but this ignores probably the most important indicator of an organization's effectiveness—impact.
Make no mistake, growth matters. Numbers matter. The ratio of program spending to the costs of keeping the lights on and raising money matters, but overhead fails to tell the whole story. Good intentions aren't enough; evidence of impact—direct, powerful evidence of improvement—should be readily available.
Impact—evaluative or third party proof that an organization is making measurable progress toward achieving its goals, or fostering transformational change in its sector of work—is a much better indicator than overhead, salaries or net dollars to mission. And there are means for measure.
Speak to staff members or volunteers, or volunteer there yourself. Or, if you know someone who has used or benefited from the charity's services, ask for their impressions of the organization's efficiency and helpfulness to clients.
Audited financials should be readily available from the organization or its website, along with an IRS Form 990, which provides a comprehensive report on mission, programs and expenses. Third-party verification of impact, through independent evaluations or reviews are also critical to informed giving, as are ratings provided by agencies such as Charity Navigator, Guidestar and GiveWell.
Check to see if the charity offers a matching gift opportunity. Not only does that provide bigger bang for your investment, but it also shows that companies are willing to share their reputation with the organization and its work.
With every gift you make, you are making an investment, and you should have confidence that your gift will be wisely and efficiently used for good.
Support the organizations that work for causes you believe in or feel strongly about, but be sure in your support. Do the research, look beyond the marketing materials to get the facts, the evidence that progress is being made, that lives are being changed, that your dollar is making a real difference.