Lately I've been noticing a lot of chatter on the internet about how you know which charities to donate to. There seems to be a general suspicion that nonprofits of all sizes who are seeking donations are swindling people out of their hard-earned money. Or at least that you can't trust these organizations and that it's easy to make the wrong decision.
I get that. There are tons of reasons why you would choose to donate, and oftentimes it's really personal. It would feel like a betrayal if you made this gift that was meaningful to you, only to find the organization was possibly doing something shady.
How can the average person really know that their hard-earned dollars are going towards the mission?
There are opinions everywhere about this. This is a graphic I saw floating around Facebook not too long ago:
It's pretty clear when you're looking at this that it's not real. I mean, whoever made this graphic couldn't even spell UNICEF right! I did some digging on these nonprofits, and no surprise, these numbers are WAY off. The UNICEF CEO does not use a Rolls Royce and does not make $1.2 million. As for the 14 cents to the dollar going towards the needy, I have NO idea where those numbers come from or what they're possibly referring to.
There's a lot of misinformation out there (so don't believe everything you see on social media!). But even though it's bogus, this little graphic says a LOT about what the public thinks makes a good nonprofit. It assumes that nonprofits should never pay their people like for-profits do. It also pits the "overhead" expenses against the direct mission expenses, so that it seems like nonprofits shouldn't spend money on their "overhead" unless it's ABSOLUTELY necessary.
These are really common beliefs people have about nonprofits. But let me tell you – that's the wrong way to find a good nonprofit. Why not look at their mission and vision? What about their IMPACT on the community they hope to serve? Are they accomplishing the good? What about their values and how they carry those values into the day-to-day?\
Those questions are way more likely to help you find a good organization for your donation.
The hyper-focus on "overhead" and executive compensation distracts you from the important stuff, and it makes you forget that nonprofits are companies. Nonprofits can fail and go out of business just like any other company. A nonprofit that claims that it gives 100% of all donations to the needy but might go under any minute probably isn't a good place for you to put your money.
Good nonprofits are sustainable. They invest in strong leaders and solid back office support, because those organizations know they can make a bigger and longer-term impact if they are set up strong.
Ultimately, I get the anxiety around choosing who to donate to. You don't want to donate your money to an organization that is really a scam set up to line someone's pockets. But what makes a "good" nonprofit is a lot more complicated than just the CEO's salary or the number of the cents to the dollar spent on their office staff.
Here are a few of my favorite indicators that a charity is a great place to give:
- The organization publishes their annual report and financial statements on their website.
- They meet standards with Charities Review Council or enroll in another program like Mission Guardian that helps them grow and stay strong.
- Even if they don’t have a fancy website, they communicate clearly what their mission and vision are and what community they serve.
On the flip side, these are things that I advise all my nonprofit clients to do. It's important that organizations of all sizes are transparent with the public and earn the public's trust.
Because of that, I've created a subscription program just for nonprofits. As a member of Mission Guardian, together we can create strong, sustainable, and transparent nonprofits. Learn more www.birkenlaw.com/mission-guardian.
Jess Birken is the owner of Birken Law Office, a firm designed to help nonprofits. Ideal Client Engagements are nonprofits looking for a strategic partner who will give pragmatic advice and keep business operations on track so the mission work stays a priority.
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