Consumer Watch: Understanding charity is key in gift decisions

Consumer Watch: Understanding charity is key in gift decisions

December 8th, 2012 by Ellen Phillips in Business Diary

Ellen Phillips

Q. I'm planning to contribute to charities this season in lieu of giving "regular" gifts. What should I look out for to make sure my money goes to the right organizations? - Geraldine Giving

A. Dear Ms. Giving: Many folks are doing the same this holiday season, especially with the awful conditions in the Northeast because of Hurricane Sandy. Real Simple magazine has some great tips to make sure your heart and your money fall in the right place.

• Understand the charity's mission. Check how the nonprofit's initiative is run; the benchmarks achieved in the past; how many people are served; and how a potential client (perhaps, in this case, people who have lost their homes in New York because of Sandy) qualify to receive the service. If you have questions about any of these steps, question the program manager. If this person can't successfully provide answers, then look elsewhere for your money to help.

• Make sure the "nonprofit" lives up to its word. In order to be qualified as such, the IRS must grant the organization a 501(C)(3) status, which ensures your money is tax-deductible, among other givens. If you're not sure of the status, check www.guidestar.org, a nonprofit database and enter the name of the charity.

• Ask about the group's spending ratio. If the former is efficient, it will spend at least 75 percent of their budgets on programs and services. (I prefer at least 90 percent before I give to a charity.) Look for this info on www.chairitynavigator.org.

• Check accountability and transparency practices. A governing board should encompass a CEO and at least five people who are independent of the charity. Additionally, check to see if they mention any religious or political associations in their mission statements; sometimes they're less open about the political aspect, if this bothers you about lobbying, etc.

• Request the charity's results. Most good organizations use either self or third-party assessments to evaluate themselves in the areas of efficiency and effectiveness.

Hang onto your money until next week when we discuss recommended charities.

Ellen Phillips is a retired English teacher who has written two consumer-oriented books. Her Consumer Watch column appears every Saturday. Email her at con sumerwatch@timesfreepress.com.