Should I Give To That Charity? Tips for Assessing Impact

We give to charity for a lot of reasons. At the same time, we have plenty of explanations why we don’t give. The most common of these is the fear of putting hard-earned money into the wrong place.

Each investor has winners and losers, and charitable giving is no different. We want to minimize the duds and maximize the charitable investments that move us closer to the society we want to see (or solve the problem we find challenging).

How do we do that? Here are a few easy steps to guide our decision-making when considering a gift to a charitable organization.

What do you care about?

The first step doesn’t even involve the particular charity you are considering. It starts with you.

Ask yourself this: How would the world be different if I am successful in my charitable giving?

By establishing this lens first, you create a filter that can be applied to every charitable request you consider. Let’s say you decide ending homelessness in your city is your philanthropic passion. That focus leads you to certain types of groups you might want to support and also eliminates many others from contention.

Lots of worthwhile causes will come along. You can’t say yes to all of them. With a clear view of what you care about most, you’re not saying “no” to the group so much as you are saying “yes” to keeping your focus, and your dollars, where you think you can do the most good.

If ending homelessness is the goal, then organizations that only provide meals may receive a smaller portion of your philanthropy. While feeding the homeless plays into the goal, it may be better to look at job training programs or policy groups with an expertise in housing laws or mental health.

Does the organization have a path to success?

You have your focus, and you’ve identified a group you think you’ll support. Now it’s time to dig deeper. What are its top priorities? More importantly, can it get there?

You can’t know the future, but you can make a bet on it. Your charitable gift goes toward the bet that the group can generate the social outcome it says it can. Has it had success in the past? Does it have the staff (or a plan to have the staff) necessary to achieve the goal? Are there obvious legal/regulatory/political/social obstacles standing in the way?

Thoughtful nonprofits won’t hide from the challenges. They also won’t hide their past success Look to understand both to determine if there is a path toward doing what you’re supporting.

What’s the group’s reputation?

We want to work with groups we trust. That doesn’t mean avoiding lesser known groups any more than it means automatically trusting “big” names. You do want to feel comfortable, though, that you aren’t giving to a fly-by-night organization.

At one of our Novus Society gatherings last year, a philanthropist said that one way to guard against wasting charitable dollars is by giving to local organizations. These groups near where you live tend to be smaller, which allows your dollar to go farther, and also means you likely know more people who are connected to the organization. At the very least, it’s staff will be more accessible.

For national groups, watchdog sites such as Charity Navigator or Guidestar rate organizations for transparency, percentage of funding that goes to programming, etc. These sites help assess the credibility of larger organizations, though smaller groups (under $1 million in revenues) can be hard to find on these services.

The best metric may be word of mouth. If a friend or two supports the group and openly recommends it, that speaks more positively than if the group simply runs ads.

Will your gift have the impact you want?

The obvious way to approach this question of impact is to loop back to the first question above and see if the group drives toward what we’ve defined as our charitable priorities. Yet no group will transform the social landscape overnight. We want the groups we support to be trending in the right direction. However, the short-term impact we see from a gift might be a little different.

For example, we may give to a group so that, beyond supporting its mission, we have a means to become better educated on the issue. Your gift might provide you access to scholars or the latest insights of an issue via the group’s newsletter. Perhaps a gift opens the door to connecting with other peers who similarly care about that issue. That’s a valid and valuable return.

Impact also speaks to the overhead issue. How much of each dollar goes to programming versus operations and fundraising? If you want to go chest-deep in charitable geekery, read up on how to analyze a group’s tax filing. More simply, head on to the group’s website or give them a call. Many groups are very open about how these percentages shake out.

There is no hard-and-fast rule as to how much a group should spend on these areas. The important thing is that the breakdown falls within a range you are comfortable with to know that your dollars support what you care about most.

Not everyone is called to work in the nonprofit world, but we all have access to change society for the better by supporting those nonprofits and the work they do through charitable giving. Give those dollars thoughtfully. Don’t give out of guilt or with a sense of fear. Instead, by knowing your goals and understanding a few high-level details of the groups you support, you can give with a sense of confidence and optimism.