4 Questions to Ask Before Donating to a Charity

October 14, 2015



4 Questions to Ask Before Donating to a Charity

'Tis the season when charitable donation requests will be on the rise. How do you know what West Michigan charity to give to? How do you know, when donating to a charity, that your money is doing the most good? As a trusted source of consumer information, we thought it would be helpful to provide you with four timely questions you should ask before selecting a particular charitable organization.

Is this a 501(c)(3) organization?

This is a good place to start because it will tell you how the organization is viewed by the federal government and the IRS. A 501(c)(3) designation is not uncommon, but it does assure you the organization has made the effort to prove to the government that it is a viable charity. Many religious, educational, children's and animal-focused charitable organizations fall in this category. It is also helpful to know that donations to 501(c)(3) organizations are tax-deductible. Be aware that 501(c)(4) and 501(c)(6) organizations are more politically focused nonprofits.

What percentage of my donation goes to administration costs?

This can be challenging to weed through because typically, you would think you would want 100 percent of your donations to go directly to the cause. On the other hand, organizations that don’t have sufficient marketing and management resources may not be performing efficiently, wasting donated dollars. You shouldn’t feel uncomfortable if an organization is spending 30 to 35 percent on administration costs if you believe in the mission of the organization.

How will the charity use my donation? 

You may be surprised to know that some organizations do most of their fundraising during the holidays because it is the season when people are feeling most charitable. Sometimes these funds are not used for holiday-related programs or projects. They may be used to fund other projects throughout the year. There is nothing wrong with that if you have faith in the organization. However, if your goal is to help get underprivileged children toys during the holidays, it won't accomplish your goal.

How much of my money will be used locally?

Some prefer to know that a good portion of their donations will stay local. If that includes you, don’t be afraid to ask. There is sure to be a West Michigan charity you can embrace. You should, however, find out who is on the local board, learn how big the board is and check that the members are not all spouses and relatives.

The BBB of Western Michigan is here to help you make the best consumer choices possible. If you have questions about any local business or organization, please feel free to contact us. Get to know us at your Better Business Bureau of Western Michigan and check out Give.org for more information on charities in your area.