Non-profits fulfill a needed and exemplary role in society because they bring aid and relief to those in need in our society. When there is a natural disaster or tragedy of any kind it is they who take the lead on the front lines along with the police, fire departments and government agencies. Often when red-tape or a lack of resources prohibit the government agencies from being effective the non-profits step in and fill the gap quickly and decisively.
The best charities like Helping a Hero, a nationally recognized reputable charity that provides wounded veterans with custom homes that accommodate their disabilities, are always prepared to provide assistance and they do it in an exemplary way. They also have processes that prove they are legally authorized to act as a non-profit and provide their services. Finally, they observe best practices throughout their operations. Here is the list they follow and what you should look for if you intend to donate to or volunteer at a non-profit.
Are they a legally registered 501(c)(3) ?
Non-profits must be legally registered with the Internal Revenue Service in order to receive their non-profit status. This legal designation is called a 501(c)(3) and it allows them to take in your money and only use it for its intended purpose and as a result, they receive certain tax breaks and can provide you with some as well. These breaks go to you whether you are donating time, merchandise or time so from that perspective ensuring that non-profit is legally registered id is critical. It also speaks to their integrity. If a company has not registered as a charity, they are allowed to spend the money you give them in any way they choose without any oversight from the government. Many of these companies spend less than 5% of their donations on the actual cause they claim to be helping. You can find out if the non-profit you are researching is a 501(c)(3) registered company by going to non-profit online database called GuideStar.org. Enter their name and you will see if the company is registered. If not ask the non-profit why they are not registered and remember without this registration there is no legal oversight of that organization as a charity. A key thing to know is that just because an organization has a website ending in .org, does not mean that they are a legal charity. So beware.
How Much of Their Donations Go to the Cause
Charities use donor’s money to do everything their organization requires. This includes salaries, traveling, their office space, marketing and every other detail related to the organization. They also use that money to support the cause they are espousing. Charities like every other business are run at widely varying levels of efficiency. Some actually spend very little on the cause and the vast majority on salaries. You need to understand what percentage of their donations actually go toward the cause. The best organizations consistently have a ratio of at least 75% of their donations going to the actual cause If the charity you are researching is much below this number, you should be wary. The first thing you should ask them why this is the case and wait to hear an answer that makes sense. If not, you should reconsider donating to them and find a more efficient charity. There are websites like CharityNavigator.org, that contain the annual financial of all 501(c)(3) companies and you can review their performance and ratios of giving here. Again, this is an important statistic to look at but there could be extenuating circumstances if the number iis below 75%. The key is to know what the number is and ask questions if it is lower.
Do your homework and give until it hurts.