How to evaluate charities to donate to?

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blueman457
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How to evaluate charities to donate to?

Post by blueman457 » Wed Jun 20, 2018 9:38 am

Blue Woman and I are looking to be more charitable now that we have gotten our financial feet on the ground.

How do you evaluate charities to donate to when they are not in your home town or you have a personal connection to? I have used charitynavigator.org in the past to see how efficienct non-profits are with their finances, but are there other resources that bogleheads use?

Thanks,

Blue Man

Rupert
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Re: How to evaluate charities to donate to?

Post by Rupert » Wed Jun 20, 2018 9:46 am

Forbes maintains a list that is helpful: https://www.forbes.com/sites/williampba ... d404143371

Also, in addition to avoiding groups with sketchy financials, I avoid donating to charities who constantly hound me for additional donations. I avoid donating (except, perhaps, anonymously) to some very large well-known charities because, once you've given them any money, they will not leave you alone. They call repeatedly, they send piles of junk mail, they drive you nuts. I even had a representative from one charity sternly lecture me on the telephone once because I refused to solicit from my own neighbors on their behalf. I don't know of any resource that warns you about such practices; you just have to learn from experience I guess.

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JMacDonald
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Re: How to evaluate charities to donate to?

Post by JMacDonald » Wed Jun 20, 2018 9:50 am

This is one organization I use:

https://www.charitynavigator.org
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cheese_breath
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Re: How to evaluate charities to donate to?

Post by cheese_breath » Wed Jun 20, 2018 10:03 am

The surest way to know the future is when it becomes the past.

Northster
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Re: How to evaluate charities to donate to?

Post by Northster » Wed Jun 20, 2018 10:04 am

Vanguard donor advised fund uses https://www.guidestar.org/search

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Wildebeest
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Re: How to evaluate charities to donate to?

Post by Wildebeest » Wed Jun 20, 2018 10:05 am

This is a great website.

https://www.givewell.org/charities/top-charities

Also if the Gates Foundation supports it, that is a great recommendation.
The Golden Rule: One should treat others as one would like others to treat oneself.

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JupiterJones
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Re: How to evaluate charities to donate to?

Post by JupiterJones » Wed Jun 20, 2018 10:08 am

There's one school of philanthropic thought called "effective altruism" that takes into account getting the maximum good (lives saved, diseases prevented/cured etc.) per dollar given. It understandably requires that the organizations take a very scientific, evidence-based approach to their work, and can back things up with stats, outcomes, etc.

Interestingly, this could put a relatively inefficient charity ahead of a more efficient one if the former managed to eek out a greater "good" from your donation (regardless of how much of your donation wound up going to overhead/fundraising costs).

I'm no expert on this though. Here are some links:

https://www.thelifeyoucansave.org/

https://www.givewell.org/

https://www.effectivealtruism.org/
Stay on target...

Rob1
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Re: How to evaluate charities to donate to?

Post by Rob1 » Wed Jun 20, 2018 10:18 am

I did a bunch of reseach on a this topic a few years. Here’s the organization I use to identify where my donations will have the most impact:

Give Well
https://www.givewell.org

There’s even the option to donate to a charity of your choice anonymously.

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dm200
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Re: How to evaluate charities to donate to?

Post by dm200 » Wed Jun 20, 2018 10:22 am

In our case, we support primarily entities we know personally.

Perhaps there is a local "affiliate" of such charities you are considering?

Be very, very wary of the intentional similar names of charities - you may donate to the wrong one.

If you wish to make small/modest donations and do not want to get bombarded with mail, email, phone calls - use a DAF (we use Fidelity) anonymous donation feature

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Re: How to evaluate charities to donate to?

Post by Yankuba » Wed Jun 20, 2018 10:32 am

JMacDonald wrote:
Wed Jun 20, 2018 9:50 am
This is one organization I use:

https://www.charitynavigator.org
Me too. I also read the IRS Form 990s whenever I can. If the 990 isn't online you can email the non profit for it. If they don't send you one it is a red flag in my book.

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dm200
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Re: How to evaluate charities to donate to?

Post by dm200 » Wed Jun 20, 2018 10:43 am

There are many national (and international) charities that are operated by faith based entities - but do not discriminate in the folks they aid/help.

Afty
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Re: How to evaluate charities to donate to?

Post by Afty » Wed Jun 20, 2018 10:53 am

+1 on Givewell.org. I really like their idea of effective altruism.

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Re: How to evaluate charities to donate to?

Post by senex » Wed Jun 20, 2018 10:59 am

There has been enough malfeasance (fraud, but also simple foolishness without fraud) that it's tough to give well to orgs you don't know well. If your child needed help, would you ask him to fill out a form with five categories from 0-100? Or would you have a real discussion and get to know the heart of his problem? It's similar with charities -- there's no robust way to distill their mission into a handful of integers or boilerplate paragraphs.

Even simple measures, like efficiency percentage, are not quite what they appear. Within a narrow sector they give a useful comparison -- for instance, you can see which food pantry is most efficient. But across sectors they can be misleading, and may cause you to give to areas that are already oversubscribed (because they are structurally efficient) rather than areas with deeper needs that are less "efficient." [1]

Sorry to complicate your decision, but I think charities are fundamentally different than investing, where you can do it arms-length by-the-numbers. It's probably best to get to know a local charity well and fund them.



[1] Charities need management, just like any business. Say you need 1 admin making $40k to supervise every 10 employees. If those 10 employees are social workers making $40k each counseling drug addicts, then your efficiency is 91% ($40k admin, $440k total spending). If those 10 employees are forklift drivers making $30k and each moving $100k worth of produce into trucks, then your efficiency is 97% ($40k admin, $1340k total spending). Thus the food pantry is more "efficient." But what if you live in a town where no one is hungry and lots of people have drug problems? It would be terrible if everyone gave to the food pantry. The pantry isn't more useful, and is not even more efficient in human terms -- it simply is moving physical goods, which have better economies of scale. Human services don't scale the same way, and thus are less efficient numerically, but are possibly more useful to society.

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Re: How to evaluate charities to donate to?

Post by CedarWaxWing » Wed Jun 20, 2018 11:05 am

Rob1 wrote:
Wed Jun 20, 2018 10:18 am
I did a bunch of reseach on a this topic a few years. Here’s the organization I use to identify where my donations will have the most impact:

Give Well
https://www.givewell.org

There’s even the option to donate to a charity of your choice anonymously.
Are you saying that this group has a mechanism to assist in making anonymous donations?

If so, I presume it is only to the organizations they have listed on their site?

I am unaware of anyway to donate anonymously and still have documentation/proof of the donation for income tax purposes, and would be very interested if there is a mechanism to do that to the charity of my choice so as not to be put on the sucker list for the next 10 years... sometimes 20.

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Re: How to evaluate charities to donate to?

Post by BolderBoy » Wed Jun 20, 2018 11:26 am

Yankuba wrote:
Wed Jun 20, 2018 10:32 am
Me too. I also read the IRS Form 990s whenever I can. If the 990 isn't online you can email the non profit for it. If they don't send you one it is a red flag in my book.
I agree with this and do it in every case. Rule out orgs that pay their CEOs outrageously (United Way?)
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Northster
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Re: How to evaluate charities to donate to?

Post by Northster » Wed Jun 20, 2018 11:44 am

As for giving anonymously, I have the same concerns. The only way I see is a Donor Advised Fund, where you get the deduction up front and then disperse the money as you wish. The Vanguard minimum is rather high, but Fidelity lets you start with as little as $5000. There is an annual fee.

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dm200
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Re: How to evaluate charities to donate to?

Post by dm200 » Wed Jun 20, 2018 11:46 am

Northster wrote:
Wed Jun 20, 2018 11:44 am
As for giving anonymously, I have the same concerns. The only way I see is a Donor Advised Fund, where you get the deduction up front and then disperse the money as you wish. The Vanguard minimum is rather high, but Fidelity lets you start with as little as $5000. There is an annual fee.
With Fidelity it it is the lesser of $100 or a percentage of the balance. Well worth the cost - in my opinion. We use ours Long Term to fund annual giving.

Rob1
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Re: How to evaluate charities to donate to?

Post by Rob1 » Wed Jun 20, 2018 11:57 am

CedarWaxWing wrote:
Wed Jun 20, 2018 11:05 am
Rob1 wrote:
Wed Jun 20, 2018 10:18 am
I did a bunch of reseach on a this topic a few years. Here’s the organization I use to identify where my donations will have the most impact:

Give Well
https://www.givewell.org

There’s even the option to donate to a charity of your choice anonymously.
Are you saying that this group has a mechanism to assist in making anonymous donations?

If so, I presume it is only to the organizations they have listed on their site?

I am unaware of anyway to donate anonymously and still have documentation/proof of the donation for income tax purposes, and would be very interested if there is a mechanism to do that to the charity of my choice so as not to be put on the sucker list for the next 10 years... sometimes 20.
Yes, one can pick an organization (only the top organizations that they have vetted and recommend), donate anonymously, and get the required proof for tax purposes. I believe one is technically donating to GiveWell, and they are then donating 100% of that amount to the charity. They do charge a small fee to cover credit card processing fees, if you charge your donation.

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Re: How to evaluate charities to donate to?

Post by Dottie57 » Wed Jun 20, 2018 12:06 pm

Wildebeest wrote:
Wed Jun 20, 2018 10:05 am
This is a great website.

https://www.givewell.org/charities/top-charities

Also if the Gates Foundation supports it, that is a great recommendation.
This a great site.

missingdonut
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Re: How to evaluate charities to donate to?

Post by missingdonut » Wed Jun 20, 2018 12:21 pm

+1 to Charity Navigator and Guidestar. I read 990s. It's more of a smell test than anything else, and it's hard to put hard and fast rules on them. I generally scrutinize any Schedule L I see (which describes financial transactions the charity has with related persons) but there are times when it can be perfectly fine to have such a relationship.

It's common for charity hunters to look at ratios with expense comparisons (such as the split between program services, administration, and fundraising). It's useful to a degree, but can be problematic because these are self reported by the charity, and are usually estimates which could vary heavily from actual. A red flag I see from time to time is a reasonably-sized organization with paid employees and an executive director (or equivalent) reporting $0 in fundraising expenses. Small, volunteer-run organizations might truly be $0, but for a larger organization it makes me question other aspects of the 990.

Lastly, be cautious. Organizations supporting military members, police, and children are notorious for having bad actors in them, and it's hard at first glance to tell the difference between a good organization and a bad one. Don't give to an organization that you heard about only when they sent you a mailer. Look for the organizations that focus on doing good rather than looking good or promoting awareness. If available, talk with a friend with similar charitable values as you and find out what they do.

It's tough to research charities, but definitely worth doing. Best of luck :sharebeer

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Re: How to evaluate charities to donate to?

Post by Rus In Urbe » Wed Jun 20, 2018 12:36 pm

Re: How to evaluate charities to donate to?
Quote
Post by Northster » Wed Jun 20, 2018 10:04 am

Vanguard donor advised fund uses https://www.guidestar.org/search

+1
I strongly advocate using Vanguard Charitable. To open a fund initially is $25K, and the smallest gift you can make is $500----but it is a great tax deduction for us; at first we thought it was too big a leap for us, but once we made it, we found that we can and should sustain annual giving in that ballpark. The fund has provided us a better framework for our philanthropy (more significant gifts to fewer, targeted charities) and guidestar.org is extremely helpful in analyzing whether a nonprofit is well-run. In several instances, we have become interested in a charity only to find that there have been complaints and missteps, in which case we send our money elsewhere.

In general, we give to local organizations that directly enrich our lives (cultural and social good organizations in our community), as well as to national/international organizations that carry out missions that we share (Center for Southern Poverty against race hatred; Smile Train to help children around the world who have cleft palates) and that also pay modest salaries to their leadership and use donations efficiently.

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dm200
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Re: How to evaluate charities to donate to?

Post by dm200 » Wed Jun 20, 2018 1:37 pm

Rus In Urbe wrote:
Wed Jun 20, 2018 12:36 pm
Re: How to evaluate charities to donate to?
Quote
Post by Northster » Wed Jun 20, 2018 10:04 am
Vanguard donor advised fund uses https://www.guidestar.org/search
+1
I strongly advocate using Vanguard Charitable. To open a fund initially is $25K, and the smallest gift you can make is $500----but it is a great tax deduction for us; at first we thought it was too big a leap for us, but once we made it, we found that we can and should sustain annual giving in that ballpark. The fund has provided us a better framework for our philanthropy (more significant gifts to fewer, targeted charities) and guidestar.org is extremely helpful in analyzing whether a nonprofit is well-run. In several instances, we have become interested in a charity only to find that there have been complaints and missteps, in which case we send our money elsewhere.
In general, we give to local organizations that directly enrich our lives (cultural and social good organizations in our community), as well as to national/international organizations that carry out missions that we share (Center for Southern Poverty against race hatred; Smile Train to help children around the world who have cleft palates) and that also pay modest salaries to their leadership and use donations efficiently.
We make many (if not most) "grants" in amounts much lower than $500 - so Fidelity works much better for us.

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dm200
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Re: How to evaluate charities to donate to?

Post by dm200 » Wed Jun 20, 2018 1:47 pm

I would be extra cautious about donating to "one time" types of charities that pop up after some sort of disaster.

Broken Man 1999
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Re: How to evaluate charities to donate to?

Post by Broken Man 1999 » Wed Jun 20, 2018 2:04 pm

I'm satisfied with the vetting that Charity Navigator does. For the most part, though, our funds stay local. One local charity earned perfect scores with Charity Navigator, Big Cat Rescue. They are sometimes the last stop for these animals, often acquired when some fool can no longer afford to feed them, or some roadside menagerie gets closed down by the critter cops. We visited the place when we lived in Tampa, grandkids loved seeing all the various type big cats.

There are some faith-based charities I like, though sometimes they are so very small they don't even make a blip on the screen. The vetting is usually third hand, but still offers some insight into the organization. Giving actual items like clothing, or kitchen stuff feels better than just handing over cash. When we redo the kitchen we are donating most of the appliances, as they aren't in bad shape, just older. Hopefully this is our last remodeling rodeo!

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

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dm200
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Re: How to evaluate charities to donate to?

Post by dm200 » Wed Jun 20, 2018 2:14 pm

I don't know if this "technique" for keeping the cost ratio low is good or bad. All charities, in some way or another have operational and fundraising costs. So, let's say a charity raises (to keep the math simple) $1,000,000 per year. Let's say their operational and fundraising costs are $250,000 per year. That is 75% that goes to "charity" and 25% for costs. [example is simplified]. The charity folks believe that this 25% ratio does not look good. What can they do? maybe lower salaries? Lower other expenses? Suppose they don't want to do that.

They go to large corporate or individual donors and "suggest" that some degree of the operational and fundraising costs be paid directly by such donors. Such donors would then reduce donations dollar for dollar. Suppose they find donors to absorb $100,000.

Now - annual donations drop to $900,000 BUT operating costs drop to $150,000. Now - the cost ratio drops from 25% to 16.7% Like "magic" :oops:

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Re: How to evaluate charities to donate to?

Post by delamer » Wed Jun 20, 2018 2:21 pm

I donate anonymously using money orders and keep the receipts with the receiving organization noted.

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Re: How to evaluate charities to donate to?

Post by brandy » Wed Jun 20, 2018 3:40 pm

delamer wrote:
Wed Jun 20, 2018 2:21 pm
I donate anonymously using money orders and keep the receipts with the receiving organization noted.
When I was able to, (over 25 years,) I did the same. Now, though my checks have my name, there is no other id, and they are sent without return address. No, I don't claim my giving on tax returns, never did, never will.

missingdonut
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Re: How to evaluate charities to donate to?

Post by missingdonut » Wed Jun 20, 2018 4:18 pm

dm200 wrote:
Wed Jun 20, 2018 2:14 pm
I don't know if this "technique" for keeping the cost ratio low is good or bad. All charities, in some way or another have operational and fundraising costs. So, let's say a charity raises (to keep the math simple) $1,000,000 per year. Let's say their operational and fundraising costs are $250,000 per year. That is 75% that goes to "charity" and 25% for costs. [example is simplified]. The charity folks believe that this 25% ratio does not look good. What can they do? maybe lower salaries? Lower other expenses? Suppose they don't want to do that.

They go to large corporate or individual donors and "suggest" that some degree of the operational and fundraising costs be paid directly by such donors. Such donors would then reduce donations dollar for dollar. Suppose they find donors to absorb $100,000.

Now - annual donations drop to $900,000 BUT operating costs drop to $150,000. Now - the cost ratio drops from 25% to 16.7% Like "magic" :oops:
A charity is supposed to report as income the in-kind donations made to them. Thus, the "technique" would not change the fact that it had $1 million in donations and operating costs of $250k. If they reported and prepared the 990 correctly, that is.

For many types of charities, 75% to program services and 25% to fundraising/admin would be more than appropriate.

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dm200
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Re: How to evaluate charities to donate to?

Post by dm200 » Wed Jun 20, 2018 4:24 pm

missingdonut wrote:
Wed Jun 20, 2018 4:18 pm
dm200 wrote:
Wed Jun 20, 2018 2:14 pm
I don't know if this "technique" for keeping the cost ratio low is good or bad. All charities, in some way or another have operational and fundraising costs. So, let's say a charity raises (to keep the math simple) $1,000,000 per year. Let's say their operational and fundraising costs are $250,000 per year. That is 75% that goes to "charity" and 25% for costs. [example is simplified]. The charity folks believe that this 25% ratio does not look good. What can they do? maybe lower salaries? Lower other expenses? Suppose they don't want to do that.
They go to large corporate or individual donors and "suggest" that some degree of the operational and fundraising costs be paid directly by such donors. Such donors would then reduce donations dollar for dollar. Suppose they find donors to absorb $100,000.
Now - annual donations drop to $900,000 BUT operating costs drop to $150,000. Now - the cost ratio drops from 25% to 16.7% Like "magic" :oops:
A charity is supposed to report as income the in-kind donations made to them. Thus, the "technique" would not change the fact that it had $1 million in donations and operating costs of $250k. If they reported and prepared the 990 correctly, that is.
For many types of charities, 75% to program services and 25% to fundraising/admin would be more than appropriate.
Good issue. Curious how such entities (both ends) do it.

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Re: How to evaluate charities to donate to?

Post by JupiterJones » Thu Jun 21, 2018 10:29 am

Of course, another option to consider is giving some or all of your philanthropic contributions not to charitable organizations, but to people. Help out those in need directly. Zero overhead that way.

Obviously you would forgo the tax deduction. But if you're like me, after the recent tax law changes, you're not deducting contributions anymore anyway.
Stay on target...

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Re: How to evaluate charities to donate to?

Post by Zott » Thu Jun 21, 2018 10:53 am

blueman457 wrote:
Wed Jun 20, 2018 9:38 am
Blue Woman and I are looking to be more charitable now that we have gotten our financial feet on the ground.

How do you evaluate charities to donate to when they are not in your home town or you have a personal connection to? I have used charitynavigator.org in the past to see how efficienct non-profits are with their finances, but are there other resources that bogleheads use?

Thanks,

Blue Man
In addition to the administration, expenses and effectiveness of the charities as mentioned above, I would recommend that you ensure that the charity lines up with your values in its actions and advocacy. This is likely to be more of an issue with large national/international organizations rather than local ones. A couple of years ago I made donations to a large international charity based upon its good reputation (including its reputation here on Bogleheads). I belatedly read over its newsletters, annual reports, articles on its website, and realized that they are advocating a policy position that I fundamentally disagree with. It was my fault, I should have read through its published material before I contributed.

So I recommend that you do similar research beforehand---easy nowadays with the internet.

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Re: How to evaluate charities to donate to?

Post by dm200 » Thu Jun 21, 2018 10:59 am

For supporting relief efforts for things like earthquakes, hurricanes, etc. internationally, I tend to support a faith based organization that has the resources available to initiate relief efforts immediately - and does not need to wait for directed funds to flow in.

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Re: How to evaluate charities to donate to?

Post by celia » Thu Jun 21, 2018 11:17 am

The problem with most of the above websites is that they do not take small, local charities into effect. A charity does not have to file a 990 unless they have income of $50k or more. So it would fail the threshold needed to be listed on the big websites. And the above-referenced criteria for "effective altruism" would automatically eliminate any charity in the arts, historic preservation, faith-based, education, libraries, animal rescue, etc fields.
JupiterJones wrote:
Wed Jun 20, 2018 10:08 am
There's one school of philanthropic thought called "effective altruism" that takes into account getting the maximum good (lives saved, diseases prevented/cured etc.) per dollar given.
For these small charities, the best way to evaluate them is to participate in their events. See for yourself what they do. This should be easy if your passions are aligned with their goals. They also usually need volunteers and board members.

Your time and talents could be more useful to them than any amount of money.

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dm200
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Re: How to evaluate charities to donate to?

Post by dm200 » Thu Jun 21, 2018 11:28 am

celia wrote:
Thu Jun 21, 2018 11:17 am
The problem with most of the above websites is that they do not take small, local charities into effect. A charity does not have to file a 990 unless they have income of $50k or more. So it would fail the threshold needed to be listed on the big websites. And the above-referenced criteria for "effective altruism" would automatically eliminate any charity in the arts, historic preservation, faith-based, education, libraries, animal rescue, etc fields.
JupiterJones wrote:
Wed Jun 20, 2018 10:08 am
There's one school of philanthropic thought called "effective altruism" that takes into account getting the maximum good (lives saved, diseases prevented/cured etc.) per dollar given.
For these small charities, the best way to evaluate them is to participate in their events. See for yourself what they do. This should be easy if your passions are aligned with their goals. They also usually need volunteers and board members.
Your time and talents could be more useful to them than any amount of money.
Many local, faith "communities" support excellent charitable causes and outreach. I am active in mine that supports a third world, remote community in education, sanitation (many aspects), agriculture and reforestation.

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Re: How to evaluate charities to donate to?

Post by Swansea » Thu Jun 21, 2018 12:07 pm

missingdonut wrote:
Wed Jun 20, 2018 12:21 pm
+1 to Charity Navigator and Guidestar. I read 990s. It's more of a smell test than anything else, and it's hard to put hard and fast rules on them. I generally scrutinize any Schedule L I see (which describes financial transactions the charity has with related persons) but there are times when it can be perfectly fine to have such a relationship.

It's common for charity hunters to look at ratios with expense comparisons (such as the split between program services, administration, and fundraising). It's useful to a degree, but can be problematic because these are self reported by the charity, and are usually estimates which could vary heavily from actual. A red flag I see from time to time is a reasonably-sized organization with paid employees and an executive director (or equivalent) reporting $0 in fundraising expenses. Small, volunteer-run organizations might truly be $0, but for a larger organization it makes me question other aspects of the 990.

Lastly, be cautious. Organizations supporting military members, police, and children are notorious for having bad actors in them, and it's hard at first glance to tell the difference between a good organization and a bad one. Don't give to an organization that you heard about only when they sent you a mailer. Look for the organizations that focus on doing good rather than looking good or promoting awareness. If available, talk with a friend with similar charitable values as you and find out what they do.

It's tough to research charities, but definitely worth doing. Best of luck :sharebeer
Lots of good points in this comment: I would add if you like supporting local organizations, try volunteering with them. You will soon get a good feel about how they operate. They also can change dramatically with a change in leadership, but as a volunteer you will get a sense whether or not they are still worthy of support.

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Re: How to evaluate charities to donate to?

Post by dm200 » Thu Jun 21, 2018 1:16 pm

Lots of good points in this comment: I would add if you like supporting local organizations, try volunteering with them. You will soon get a good feel about how they operate. They also can change dramatically with a change in leadership, but as a volunteer you will get a sense whether or not they are still worthy of support.
Yes - depending on all the details, if you have a "cause" that you want to initiate support for, perhaps your own (or another) faith community (such as a parish) might allow and/or promote the cause and handle some of the things like receiving tax exempt donations, disbursing the funds properly and certain recordkeeping. I know several such situations locally - including my own.

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Re: How to evaluate charities to donate to?

Post by brandy » Thu Jun 21, 2018 1:22 pm

Is there a site anyplace to list, maybe by city, state or region, favorite smaller local charities? Is that something that can be done here, maybe even as part of this thread?

There's 3 here in my area--southwest USA--1 helps a specific group of people, the other 2 are animal rescues.
I think all three are all run by only volunteers. They are all 501(C)(3)s, all have urls, and I know they could use more help.
I've also given to directly smaller (local, but not in MY area) animal and people helper organizations that I've come across via the internet.

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