Donations! Where Does Your Money Go?

It’s the most wonderful time of the year.  It is also one of the most giving times as well.  People open their hearts and their wallets to help worthy causes and most are legit.   When making a decision on which charity to donate to, most people consider the “efficiency” of the organization.  What percentage of the monies received by the charity goes to funding its mission verses other costs such as fundraising activities, salaries, and other overhead.   When giving to a non-profit you can always check its financials, which are required by law to be available, see below:

https://www.irs.gov/Charities-&-Non-Profits/Exempt-Organization-Public-Disclosure-and-Availability-Requirements

Tax-exempt organizations must make annual returns and exemption applications filed with the IRS available for public inspection and copying upon request. In addition, the IRS makes these documents available. The questions below relate to the public disclosure and availability of documents filed by tax-exempt organizations with the IRS.

There are several ways you can check out the charity but the most direct way is to ask for a copy of its financials so you can determine if your money is actually being used in the way you believe when you give.  There are sites like Charity Navigator and GuideStar which are very helpful in showing you what percentage of your giving goes to support the mission, as opposed to administrative expenses. Some nonprofits have a large overhead, but according to the charity ratings site, if they are spending more than 33.3% of their total budget on overhead, the organization is not meeting its mission.  However if your “cause” or “local charity” is not listed we suggest you request the disclosure from your choice of giving and make sure your money is helping the cause you desire.

FYN will be taking a look at some of our local charities and letting you know what we find.  Giving is great but it is always a good idea to make sure of how the money is actually being used.