Last month, we discussed car donations in this column. But most people who give to good causes do it in a form that can't be driven to a charity's doorstep--cash or artwork, for instance. Call it a sign of the times, but even writing a check might require more legwork these days. That's because in the past year, the IRS has increased its scrutiny of charities, and Congress has held public hearings about nonprofit accountability--or the lack of it. Our nation's leaders, in short, are warning us that not all charities are created equal. How, then, can you be sure your philanthropic dollars are being used for the good works you expect?
Fortunately, it's pretty easy to take a peek under the hood, financially speaking, of U.S. charities online. Your first stop should probably be www.guidestar.org, which has been posting charities' public filings for more than a decade. Although you have to register (for free) to access much of the information, you'll be able to find everything from mission statements to boards of directors to the annual Form 990 filings for charities you're considering. You can even establish fixed criteria and use it to search more than 1 million U.S. charities.
The Better Business Bureau (BBB) has a charity information site, www.give.org, which is another good place to visit before making any decisions. The BBB rates nonprofits and recommends, for example, that at least 65 percent of a nonprofit's expenses go toward charitable activities rather than fund raising or overhead, and that an independent board of directors oversee things. Read the "Charity Standards" on this site as a helpful point of reference.
If you'd rather leave the sorting and searching to someone else, websites like The American Institute of Philanthropy and www.charitynavigator.org offer updated information on many charities. Both sites, and others, focus heavily on nonprofit executive compensation, but provide other helpful information, too.
Keep in mind that there are legitimate reasons some nonprofits' numbers will look better than others. Relatively young charities might have to spend more as a percentage of costs on advertising or fund raising, for example, than well-established groups. Still, if anything looks fishy, it probably is. But there's always another charity around the cyber bend.