How do I know my donation will make a difference? When evaluating a charity that is the fundamental question that you are looking to answer and it's a great question to ask. How we go about answering that question is where we often lose our way. In many ways, the way we think about charity is dead wrong and "authorities" like MoneySense magazine, while trying to help, are actually doing more damage then they know.
So before you start looking at the next charity you want to give to here are...
3 Mistakes To Avoid When Evaluating A Charity
1. Focusing on financial numbers.
Impact cannot be easily summarized. It's even harder to put into numbers. And it definitely doesn’t come out in financials. Many of the most high impact programs doing the most innovative and impactful work are more expensive to run and maintain. I recommend that you don’t even look at these financial ratios (period) because they mean nothing about what you are looking for! You are looking for organizations that have an IMPACT in our world, not those that spend frugally.
Be rigorous in exploring what an organization is actually accomplishing, what change it is actually facilitating and what people are being positively influenced by their work. How much they spend on what will not tell you that and if a charity can't answer those questions around impact then no matter what their financials say they are not worth your trust or your money.
2. Not caring enough about the “gut” or “feel goodery” factor.
You give because you care. You give when you are moved emotionally. It feels good to give. You should embrace this fact and not avoid it or feel guilty about it. Maybe it's North American charity's puritan roots at play but sometimes we can feel like charity shouldn't be about us or how we feel but about others and how we help.
Why can't it be both?
There's a theory in fundraising called "social exchange theory" that suggests there is an actual exchange between the party giving (donors giving money) and what is being returned (good feeling, acknowledgement, tax receipt, etc.). According to that theory, and general economic theory on how we make decisions, we should then be looking to get the most return, in the way of good feeling, as we can for what we give away. So do that!
3. Comparing apples to oranges.
Large organizations compared to small. Hospitals compared to international organizations. Foundations compared to charitable organizations. There are different types and sizes of organizations with different missions and focuses so don’t try to lump them all together. My background is with international development organizations and that industry could not be more different than a local hospital or university yet they are often compared together, side by side.
It's not that one area is better to give to than another or more deserving (although you can make that argument) but that they should not be compared to one another in the first place. You should determine what area you are passionate about and want to give and then do research within that area and compare organizations to one another (remember that your comparison should not be financially focused...).
So there's 3 mistakes to avoid when evaluating a charity but what can you do more proactively about it? Glad you asked, here's...
3 Things To Try When Evaluating A Charity
1. Follow them for a month.
Like them on Facebook, follow on Twitter and sign up for emails. Reach out to them in those ways and see how they respond. See what they post about, how they talk and what impact they communicate. Is it all about them? Are they only asking for money? Do they tell stories? Are there ways to get involved?
2. Make a small donation first.
And then sit back for 3 months and see how the organization will treat you when you make a small donation. Are you thanked? What is their tone? Are their materials nice? Do they tell you how you are helping? Do they immediately ask you for more money? How do they make you feel? If you like your experience then go ahead and make a bigger donation or increase your involvement. If not, move on.
3. Get a meeting or call with staff or leadership.
This might sound hard but most small and medium sized organizations would take 15 to 30 minutes for a call or coffee if they can and you can hear from them directly. 30 minutes on the phone will go a long ways in learning more about them in your research process. And if they won't make time for you then that's a good indication of what they believe about caring for you, the donor.