As a donor, it's always important to ensure you’re giving your money to an accountable charity (i.e., not a scam). And while most consider a charity's budget, mission, and values as qualifying factors, donors interested in accomplishing the most impact possible with their dollars need to do a bit more investigating - and you may be surprised to learn that the investigation begins with you.
People spend their time and money on things they value. So, it makes sense to take time to reflect on your personal values before giving to a cause or aid an organization. Not sure where to start? Here are a few resources to help you figure out what values you prioritize:
Helpful Hint: These lists can get overwhelming. Try picking only three to five core values. This will help to navigate your initial grant-making.
You have your list of core values, and you know how and why they are essential to you. Now you can use this information to navigate through the many nonprofit databases out there to determine what focus area(s) match your desires: arts & culture, disaster relief, climate change, education, environment/conservation, faith-based, health, policy & justice, social services, youth development, etc.
The amount you can accomplish with your donation varies widely from cause to cause. Sometimes you can increase your impact simply by broadening or narrowing your scope. For example, if you’re interested in supporting environmental causes in the US, consider organizations working on an international level or organizations specifically focused on policy implementation.
Here are a few well-known nonprofit databases to help you on your search.
Helpful Hint: Most of these resources are free when you sign-up. However, there are extra perks to paying for a membership. If you plan to do a lot of your own nonprofit research, it might be worthwhile to invest in a yearly resource subscription.
A common challenge for many donors is confidently selecting the recipient. With so many organizations and options, which nonprofit should get the funding? It’s not a simple answer, but it is usually contingent on the type of donor, funding amount, focus area, and overall grant-making goals. Here are several important questions you should ask to determine if the nonprofit is a worthwhile recipient of your funding:
You should have a clear understanding of their mission and what functions your money will support.
What sets them apart from organizations with similar missions? In general, it is a good rule of thumb that nonprofits are aware of their surroundings and know who else is doing similar work. Ideally, you want to hear that there is collaboration across organizations or hear a clear difference in the type of services provided.
The answer to this question can be tricky to untangle. Many nonprofits desperately need operating support/ unrestricted funding, which can be off putting to some potential donors. However, in some cases (primarily due to COVID-19), start-up, small, and even mid-size nonprofits are in need of general operating funding for basic expenses. To build trust with the people leading the organization, some good follow up questions would be: What progress has the organization made towards its goals? How was this accomplished?
Ask for an annual evaluation. It is not uncommon for grantee organizations to share a yearly review of their successes (and challenges). For example, if you're going to support an educational institution, look for data that illustrates the improvement in academic performance for their students. Organizations that know how to push the needle forward in a focus area will have historical data to measure progress and mold decision-making. This is an opportunity for them to share their results, make a case for additional support, and possibly even suggest how to create an bigger impact with your donation.
Donors who want to make a major impact must think about what the organization will look like in the near future, and consider this when giving a gift. For example, suppose you planned to give a gift to build an elementary school in Nicaragua for coffee farming families. Consider giving a multi-year gift in which the first year covers the cost of the school, and the second and third year donations cover teacher's salaries, school supplies, and transportation for the children. Now you've just transformed what this nonprofit can do for their community. Plus, they will be able to share your donor story with other potential funders to gain more interest and support.
The organization likely has full-time staff who work with various donors and nurture these relationships. Are there other donors who share your priorities and values. Are there specific projects or programs funded by these particular donors? This is a great way to expand your network and build meaningful relationships with like minded people while opening the door for collaborative funding projects.
The nonprofit should not be surprised by this question. Remember, all IRS filing for nonprofits is public record. Usually, these statements will be on a website, but it is always good to know that important documents and resources are kept organized and readily available. Review as much financial information as possible. Is the provided information recent? Is it transparent? Are the expenses in line with the organization's budget? Has the budget altered dramatically in recent years? Verify it's still in good standing with the IRS and has its tax-exempt status—you can also find this easily on GuideStar.
Helpful Hint: Remember, social organizations are very busy, and you want them to be. So, when you call to ask your initial questions, ask for the person's email. That way, you can send a follow-up "thank you" note and ask any additional questions after the call. Nonprofits love to stay connected to potential prospects, so you have nothing to lose!
After reading this article, giving may sound like a full-time job- I think it is! Thankfully, there are a myriad of resources out there to aid donors of every level. In the end, a strong, trusting relationship with one nonprofit whose mission truly means something to you, will create far more significant impact (and feel much more fulfilling) than simply giving money away to various nonprofits you have no connection to, or know little about.