Holiday donations go further when you give smart

By: Tiffany Esshaki | Birmingham - Bloomfield Eagle | Published December 21, 2016

 Charities often publish their financial information on their website. In other cases, answers about spending can be found on tax documents.

Charities often publish their financial information on their website. In other cases, answers about spending can be found on tax documents.

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METRO DETROIT — Have you ever wondered, after you scrounged your pockets for a few bucks and slipped it into that charity canister, where the money goes from there?

You’re not alone. 

While many people are happy to give back to those in need, particularly during the holiday season, it’s hard not to question whether your donation dollars are being used wisely.

Close to 8 million people have similar concerns, according to Sandra Miniutti, vice president of Charity Navigator. That’s how many people log on to the free website CharityNavigator.org to see which organizations are worthy of their support.

“The visits to the site definitely get a boost between Thanksgiving and Giving Tuesday, which is a new movement in the past five years encouraging giving on the Tuesday after Thanksgiving,” said Miniutti. “But it jumps up again after Christmas. The biggest day for giving is New Year’s Eve, and it has a lot to do with making contributions for it to count on this calendar year’s taxes.”

So what are clickers looking for when they’re vetting a charity? Miniutti said the site, which rates more than 8,000 organizations, gauges each one on a 0- to 4-star scale that considers performance, accountability, transparency and financial health. 

“We’re looking for things like efficiency, whether they have a rainy day fund, a diverse board — like, for instance, is the CEO reporting to a husband or daughter?” she explained. “What we currently don’t have in there, because it’s really challenging to rate this on this scale, is the impact of the charity’s work. Donors really need to determine that on their own.”

The information that analysts at Charity Navigator use to rate organizations is largely based on the 4990 tax document, which is filed annually with the IRS. 

“Even if we haven’t rated the charity, there’s a good chance we have their 4990 available on our site, along with information on how to analyze that document so you can feel confident with giving.”

The same way the Better Business Bureau keeps track of businesses and their practices, the BBB keeps a close eye on charities with a branch called the Wise Giving Alliance at Give.org.

Melanie Duquesnel, president and CEO of the BBB chapter serving southeastern Michigan, said the WGA looks deep into the work that nonprofits do and rates them on 20 standards.

“We’re looking at board oversight, board size — we want to make sure it’s an off number so there’s no voting problems — board compensation and what that compensation is for, conflicts of interest, fundraising expenses,” she said.

How much money does it cost for a charity to raise money? That’s an important question, according to Duquesnel, who said she’s less concerned about overhead costs — that’s the price of paying for staff and operating expenses — and more concerned about unnecessary expenses when it comes to nonprofit operations.

“That’s something we came across about three years ago. A charity was pointed out to us as having a third-party service raising the money for the charity. After the cost of that fundraiser, only 55 cents for every dollar was going to the charity, and that’s not counting the charity’s own overhead,” she explained.

If donors sift through the ratings and do their own research only to find their charity of choice isn’t all it’s cracked up to be, that’s OK: Many rating sites offer search options by mission — cancer research, poverty assistance, ending animal cruelty and anything in between. So you can make sure you give your hard-earned money to the cause you’re passionate about, even if it’s through a different agency.

And when you finally feel confident about who will receive your generous donation, take one more step back and make sure you’re giving it to the right spokesperson. 

In a prepared statement last month, Oakland County Sheriff Michael Bouchard said there are plenty of criminals who will try to make a quick buck by pulling at your heartstrings. The person calling your house, emailing you, cornering you at the mall or coming to your door may not be from the organization they say.

“Once you have done your research, consider donating to the charity directly, rather than giving money to the person claiming to represent it,” the statement reads. “Writing a check to a charity, rather than giving cash, will help you document your donation for your records and for your tax return.”

Duquesnel agreed, saying that with the emergence of crowdfunding sites like GoFundMe.com, it can be harder than ever to tell if your money is really going toward the cause you intend.

“I always say if you get a solicitation call and you’re interested in giving, just thank the caller for their time and hang up. Then go to your phone book or look up the charity and give to them,” she said.

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