The end of the year is a great time to give. Not only does the holiday season create a spirit of charity and generosity, it also provides donors with one last chance to make contributions that can be deducted on their 2015 tax return.
However, not all charities spend donors’ dollars wisely. The best charities use donations to make the biggest impact, ensuring that they do the most good with their funds. Here are some tips to identify the best charities.
How to Tell if a Charity Is Worth Your Money
The first step in charitable giving is making sure your finances are in order so that you can afford to give, said Paul Tarins, a financial planner and founder of Sovereign Retirement Solutions in Florida.
“You should create an overall financial plan and include your wishes for charitable giving, who you want to give to, and which specific charities or causes are meaningful to you,” he said. Once you know how much you can afford to give, you can look for worthy organizations that will put your money to good use.
What Portion of Your Donation Goes to the Cause?
“The first thing I would look at is how much of every dollar actually goes to that charitable cause,” Tarins said, as opposed to “how much is eaten up by management fees, costs or marketing costs.” If at least $.70 to $.80 of every $1 in donations is directed to the cause, that’s a good sign, he said. Numbers above that are great.
Tools like CharityNavigator.org and Guidestar.org can help donors find out how much of their contribution is dedicated to the charitable mission.
Is the Charity Financially Sound?
Many charities publish annual financial reports on earnings, donations and expenses for donors to peruse. Also look to see whether the charity is experiencing revenue growth. “Is the charity growing year in and year out?” Tarins said. “You want to make sure this charity has an attainable mission and is realistic.”
It’s also important to look at fundraising efficiency, or put another way, how much the charity raises compared with the costs of fundraising.
How Transparent is the Charity?
“If there’s something that doesn’t jibe, call the charity and ask about the numbers. See if there is an explanation,” Tarins said. There could be reasons why a charity’s most recent numbers might be less favorable than you’d hope for. Contact the charity and talk with its staff. You could gain insight into how open and transparent the organization can be.
How Deeply Do You Care About the Cause?
The most important factor in picking a charity might be how passionate you feel about its mission. “Big name charities are well known but that doesn’t mean that their missions will be close to your heart,” Tarins said. “Follow your passion. Try to find charitable foundations that match that.”
5 Charities That Spend Your Donations on Their Causes
Most people want to give to charities that will use their money to do more good. This often means choosing charitable organizations that direct a high majority of their funds toward its programs rather than to fund overhead costs or administrative pay. Here are five national charities that put nearly all of their donations toward advancing their missions.
Related: 5 Charities Warren Buffett Loves
1. Task Force for Global Health
Task Force for Global Health works with major global health organizations like UNICEF, the World Health Organization and the United Nations Development Programme to deliver health services to children in need around the world. It focuses on providing global immunization and vaccines to maintain healthy children and families.
The charity was listed as the only one on Forbes’ list of the 50 largest U.S. charities with a charitable commitment of 100 percent in 2014. That means that nearly all of Task Force for Global Health’s funds went directly to the charitable causes it supports. It also has a fundraising efficiency score of 100 percent, which means the dollars spent on fundraising are matched by donations.
Its 2015 numbers tell a similar story. Task Force for Global Health raised $1.66 billion from August 2014 to August 2015 and spent $1.65 billion on its charitable programs.
TaskForce.org has a link to donate to the charity through Network for Good. Donations can be made by debit or credit card and PayPal. Donors have the option to donate once or on a recurring basis.
2. Brother’s Brother Foundation
As a gift-in-kind charity, Brother’s Brother Foundation accepts goods and services as donations and then redirects them to those in need. According to its site, this charity’s efforts focus on providing support to needy communities and disaster areas worldwide. It has sent medical equipment, textbooks and emergency disaster aid to 146 countries.
The Brother’s Brother Foundation scored 100 percent on Forbes’ measure of fundraising efficiency. The foundation received $243.6 million in donations in 2014 and spent $234 million on its charitable program, showing its program spending is equal to 96 percent of its donations that year.
Donors can go to BrothersBrother.org to give to the general BBF fund or to United States disaster relief. The site also has instructions for donating medical, educational and humanitarian supplies.
3. Direct Relief
Direct Relief is a charity with a central mission to help people affected by poverty or emergency situations by providing essential medical resources for their care. Its main areas of focus include maternal and child care, disease prevention and treatment, emergency response and strengthening health systems. Direct Relief provides aid in all 50 states and 70 countries.
Direct Relief received $450 million in donations in 2014, Forbes reported, and had a 99 percent charitable commitment and a 100 percent fundraising efficiency. It also came in at No. 1 on CharityNavigator.org’s list of “10 of the Best Charities Everyone’s Heard Of,” with high rates of growth in both revenue and program spending.
On DirectRelief.org, the charity clarifies that “0 percent of your donation is spent on fundraising. Every dollar we receive goes directly to providing medical aid to our clinic partners and keeping our programs running.” It offers a variety of donation options, including monthly contributions, asset donations and hosting fundraising events. Other options to participate in Direct Relief’s efforts include fundraising, volunteering and becoming a corporate supporter.
Good360 works to connect companies and individuals with nonprofits in need. This organization primarily connects companies with surplus goods to a network of 40,000 qualified nonprofits that collect those items to distribute to needy individuals and families. They’ve provided four million diapers to families with newborns, 10,000 mattresses to disaster survivors and 8,000 cartons of clothing, shoes and accessories to underprivileged families.
You can donate a cash gift toward a nonprofit’s wishlist, which coordinates with Good360, and help cover the cost of the goods that nonprofits need to support their missions. Donations can also be made to Good360 directly to help cover administrative and delivery costs. The organization estimates that for every $1 donated, it delivers $30 worth of goods on average.
Good360 received $310 million in donations in 2014 and had a charitable commitment rate of 99 percent with a fundraising efficiency of 100 percent, Forbes reported.
5. MAP International
Medical Assistance Programs, or MAP International, provides health care and relief to the world’s poorest communities. According to its site, MAP works to provide medicine, prevent disease and promote health to create lasting change.
The charity raised $346 million in donations in 2014, Forbes said. It was named second on CharityNavigator.org’s list of the 10 best charities. MAP’s 99 percent efficiency rating means that the vast majority of its spending is on services and programs that directly help people. Its fundraising efficiency rate is 99 percent.
Donations can be made securely at MAP.org using a debit or credit card. The charity estimates that every $1 donated helps deliver $60 worth of medicines. Additionally, donations up to $100,000 are being matched through Dec. 31, so your dollars do twice the work.
As the holidays approach, and as the 2015 tax year draws to a close, consider donating to a cause that is close to your heart and reap a tax break as well. But do your homework. Seek out the charities that use your donations wisely to make the biggest impact.