Perhaps you feel strongly about the cause, or you have extra money and would like to do some good. Whatever your reason, there are a few things you need to know before you donate.
- Know that the organization is legitimate. You often hear about nonprofit organizations misusing your money. You don’t want to give to an organization that it is funding multimillionaires instead of going to people who are truly in need. Therefore, you should Google the organization; if you are unsure, include the word “scam” in your search. This way you’ll know your funds are going to an organization that uses them correctly.
- Know that your contribution is tax deductible. For some donors, this is essential because they want any money they donate to be deducted from their taxes. To find out the status of your monetary contribution, you will want to look up the tax status of the charity. This information should be publicly available via the organization you wish to donate to.
- Know how your money is being used. You don’t want your contribution to be misused. After all, that is your hard-earned money, and you want it going to the right place. One way you can verify if your funds are being used correctly is to check the organization’s spending ratio. The most efficient organizations will spend at least 75 percent of their budgets on services and programs, with the remainder going toward administration. As a rule, the higher the spending ratio, the better.
It may take you time to find out, but knowing that you are contributing to a legal tax-deductible organization with a high spending ratio, can lead to peace of mind when you make your contribution. After all, the point of donating money is to know that it is helping others, not lining someone’s pocket with extra cash. You want to make sure your organization of choice is worthy of your hard-earned money!