Talking to a Nonprofit Fundraiser About How to Make Effective Charitable Donations

Step 1: Research.

Maxine (not her real name) is a nonprofit fundraiser with more than 10 years of experience. She’s worked for some of the largest nonprofits in the US as a major gifts officer and currently works for a large regional org. Her interests include social justice, education, LGBTQ+ and other civil rights, animal welfare, and the environment.

Hi, Maxine! Thanks for agreeing to chat. You reached out to The Billfold to discuss how we can choose which charities to support and how to get the most out of our philanthropic efforts, so let’s start with that very first question:

How do you choose a charity?

This is a really big and important question that has many answers and none of them are ideal. There are a lot of charity evaluation/watchdog groups out there but no one has really come up with a great way to evaluate charities on the strengths of their results and programs.

Which is really what you should be looking at when you’re looking for a nonprofit to contribute to — not their overhead percentage or their CEO’s salary, but how effective they are at carrying out their mission.

Because it’s really hard to evaluate those outcomes objectively, you’re going to have to do some research to find a charity that you want to support.

I usually start with GuideStar. You can sign up for a free account that lets you view a charity’s 990 forms for the past few years, and they also have information about program outcomes. Most of that info comes from the charity itself, however, which can be problematic.

GuideStar nonprofit reports and Forms 990 for donors, grantmakers, and businesses

What if you did what I’m guessing most people do and just pick a charity they’ve heard of? How high are the odds that they’ll have given their money to a worthwhile organization?

Oh yeah, that is super common!

Most of the large brand-name charities might not be the most effective in their given field, but there is a good chance that they’re at least reasonably effective because there’s a lot of public accountability.

I want to make sure we’re getting our terms right, too: is something like Planned Parenthood a “charity?” Or is it better described as a “nonprofit organization?” And do those types of service-based nonprofits, particularly the ones that are in the news right now (Planned Parenthood, ACLU, Southern Poverty Law Center), have better records of demonstrable outcomes than the “we take your money and give other people stuff” kinds of charities?

I use the terms charity/nonprofit interchangeably to refer to organizations with 501[c][3] status. Which is how the IRS designates tax-exempt social good orgs.

So, very broadly speaking, there are two broad ways to categorize charities:

1. Direct service work, like a homeless shelter, your local food bank, nonprofit health clinic, etc.
2. Advocacy, which I would categorize as lobbying or activism. Sometimes even legal work, though I guess that could be considered direct service too.

Most larger orgs tend to do a mixture of both. Planned Parenthood is a perfect example. They provide free/low-cost medical care through their clinics, but also work on passing pro-choice legislation and challenging restrictions to contraception/medical access.

ACLU and SPLC I would characterize as almost purely advocacy.

Got it. Thank you! This is why you are the expert. 😀

Ha!

So let’s say you’ve done your research, you’ve checked out GuideStar, and you’ve identified a few charities you’d like to support. Is it better to give all of your charity budget to one org, or split it up? What about one lump sum vs. smaller monthly donations? What is the most useful from the charity’s point of view?

Now this is where it gets really interesting!

My work is in leadership/major giving, which for most orgs is 4- 5- and 6-figure gifts (the bigger the org’s annual budget, the higher the threshold for a major gift).

So… as a professional, I would encourage you to give larger amounts to fewer charities. BUT — that’s not necessarily what I do in my own giving!

Interestingly, men tend to give larger amounts to fewer charities and women tend to spread it out over more orgs.

That is FASCINATING.

Regarding one-time vs. monthly giving, there are pros and cons for both. Charities are charged a fee for each transaction (for example, $0.35 per transaction + 3 percent of the transaction amount). So, by giving monthly, a smaller percentage of your money is actually going to the cause, but it’s really negligible. Plus, donors tend to give more overall when they’re giving money automatically on a recurring basis. It’s the same principle as having automatic withdrawals from your checking to your savings.

Another thing to consider is that once you are signed up for a monthly donation, it can be virtually impossible to cancel. Check to see if there’s a phone number or email on the website for the development department (charities often call their fundraising departments “development” or “advancement” or “philanthropy”). There probably isn’t contact info, and even if there is, there’s no guarantee that anyone will respond to you. I think this is gross and my workplace doesn’t participate in this sort of thing, but I know plenty of charities that have this as an unofficial policy and plenty of people that have had to cancel their credit cards in order to stop payment on a recurring donation.

Is there any way to figure out which charities might need more support than others? When I see headlines like “charity receives record donations,” part of me is like “yeah!!!” and the other part is “okay, maybe I should have donated to a less popular charity that’s still doing important work.”

The most important thing is to give to charity in the first place.

As long as you are giving to a charity that you think is doing important work, that’s what matters. We live in an America where $$ = speech. Giving money to a cause you believe in is one of the best ways you can exercise your right to free speech and be an activist.

Thumbs up to that. 👍

Just do your research.

If I can tell a story from my own work though…

Please do!

Lately there’s been a charity from the sector that I currently work in that’s been in the news a lot (not any of the ones we’ve discussed so far). They’ve seen a huge influx of donations from all over the country int he wake of the presidential election.

This charity has a really great mission and lots of good PR and celebrity supporters. But they don’t actually do anything!!!

Is this the sort of thing people would be able to find out via research?

Probably, but not necessarily.

What about Tumblr? I hate to say that’s my go-to source for whether a charity is good, but that’s how I learned “the truth” about a few charities that shall remain nameless.

Hmm, I’ve never really used Tumblr so I can’t say.

Fair enough. There’s a lot of social justice stuff on Tumblr and people are ready to call out everyone else for being problematic so…

I would say this: Learn how to read a 990. Look at the board of directors and senior leadership. Is it a diverse board/leadership (POC, women, etc)? Are there experts in the field on the board/in leadership?

Read the annual report, which will usually focus on what they’ve accomplished over the last year.

And read reviews. But do all this with a grain of salt. Reviews tend to be written by people with an axe to grind, not satisfied customers.

If there’s been a major scandal at a charity you’re considering supporting, look at how the charity has responded. Maybe they took a risk and it didn’t work out. Maybe leadership has changed in the meantime. I used to work at a charity that had a very vocal critic that had a personal issue with the CEO stemming from a time they both worked together. It had nothing to do with our org, but that critic had made it their life’s mission to take the CEO down and our org along with it. As soon as the CEO left, the criticisms of the org died down, although he still continued to attack the former leader.

If you have friends who work for or volunteer with a charity you’re interested in supporting, ask them what they think.

Very true, and all good advice that I hadn’t thought of, especially the part to look at leadership. It makes perfect sense.

Any final thoughts or advice?

One point that I wanted to make is that the charitable sector is pretty small. It accounted for just over 5 percent of the national GDP in 2014.

No one charity is going to be able to solve every problem or social ill.

And charities have to take risks — for example, engaging in an expensive lawsuit that they might end up losing.

So I would say — don’t penalize charities for taking risks or for not being able to help every person/issue that comes through their doors.

Also — now more than ever is the time to give. Even though we can’t solve everything, YOU can make a difference. Honestly, giving money is the best way to do that.

March in a protest, call your legislator, sign petitions, volunteer. But if we’re going to make significant and sustainable progress, we need an army of well-funded nonprofits with a robust infrastructure. The entire sector is facing potential deep cuts in government funding and reductions on charitable giving incentives under the new administration.

So now is the time, more than ever, for ordinary people to step up to the plate.

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