Recent news that mega-billionaires Bill Gates and Warren Buffett persuaded 40 families on the Fortune 500 list to pledge a total of $125 billion to charity captured a lot of attention.
But the fact is, you don’t have to be a billionaire to give to charitable causes.
The vast majority of charitable giving in the United States comes from people who aren’t wealthy. Some 89 percent of Americans donate money to charity, and their average annual gifts total $1,620, according to the National Philanthropic Trust.
There are plenty of good reasons to give some of your money away. Most givers say they feel they are making a difference and are helping to meet critical needs with their money. Such a sense of purpose often empowers givers.
But how do you determine the best organizations to receive your money?
Here are a few factors to consider:
1. Think of organizations and charities that have affected you or your family in some way. Have you had loved ones face a particular disease such as cancer? Do you attend services at a church, synagogue, mosque or other house of worship? Often, donors prefer having a connection with the charity that gets their money.
2. The number one recipient of donations from wealthy Americans is the vast array of educational institutions. Especially in today’s economy, universities and other schools face funding cuts. Helping provide education for people who might not be able to afford it otherwise is a fine way of ensuring that your donations make a difference.
3. Once you’ve settled on some potential recipients, start researching them. Every nonprofit organization in the United States is required to fill out a federal form that lists crucial financial information. It’s called a Form 990, and it is public information. Start by asking the charity to provide a copy. If you cannot obtain a 990 in this way, check a website called GuideStar.com, which keeps track of the 990s of thousands of charitable organizations.
4. Once you’ve obtained the financial records, dig a little deeper. Don’t rely on the percentage of donations that cover overhead as the sole means of evaluating a charity. It’s better to look at what the charity is actually doing. To do that, ask for information on the charity’s accomplishments and do some spot checking to make sure the list is accurate. See if the charity provides a clear annual report, a monthly newsletter or an easy-to-navigate website, which should provide information that may help your decision.
5. Finally, check organizations that rate charities, such as GuideStar.com, charitynavigator.org and givewell.net. Each of those organizations pores through records to determine ratings for the most effective charities.
Whatever you decide, do give. Your charitable donations are a crucial part of what’s right about America. Giving helps provide meaning to a life of true wealth.
Tags: charitable giving, Form 990, goal setting, motivation, philanthropy, savings, social benefit, tithing