Five tips to make sure your money is put to good use

With more than a million charities in the U.S. alone, choosing which ones to support can be a real challenge. Here are five key tips to consider to ensure your money will be put to good use.

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Talli Sperry: I have a question from Fred, and he’s asking, “Can you help me evaluate the effectiveness and efficiency of charities in delivering great results for their beneficiaries?” Al, could you talk a little bit about how you see clients decide where to give and how to evaluate a charity to make sure that it’s solid enough to benefit their giving plan?

Al Weikel: Sure, absolutely. Well, in working with clients, a lot of times what they’ll look for first in charities is that they’re, first, effectively governed, that they’re transparent, that they’re accountable, that they’re financially responsible, and that they’re aligned with their core values. And if that’s the case, they find these types of organizations generally they’ll look at four things. They’ll look at strategy and results, so what is the charity’s strategy? Is it broad or is it narrow? Is it narrow enough to actually get something done and have impact or is it too broad? Goals, do they have goals? Do they have a way of tracking their goals? Not all charities are good at really being able to measure effectiveness, so you want to see if the charity has measurable goals.

Talli Sperry: They’re making a difference.

Al Weikel: Exactly. Next is leadership. So, you know, is the leader inspiring the staff? Is the leader attracting good people? Sometimes if it’s tough to find out if they have goals and measurable goals, get to know the organization. If there’s a board, is the board engaged with management? So a lot of things around leadership are really good to look into to see when you’re doing your due diligence with these charities.

Next would be financials. Is the charity sustainable? Perhaps one of the very important things to look for is a diverse funding stream. Right? If they’re too reliant on say one particular donor, that’s not good for sustainability purposes. So you want to make sure there’s multiple sources of funding.

And the other thing I would say is on overhead costs. A lot of people make the comment that they want to make sure every dollar is going towards the cause, and I would just caution that a little bit to say that sometimes, you know, an earlier, an establishing charity will be investing in financial software or adequate workspace or things that are creating overhead costs but it’s in by no means a way of measuring the effectiveness of how they’re actually taking care of the causes that they care about.

Talli Sperry: Because those things could help the mission move forward. And I know international charities, sometimes they have more overhead, right?

Al Weikel: That’s exactly right. So don’t put too much emphasis on that overhead. Get to know that leadership and their strategies and their causes.

And, lastly, it’s looking at the organization itself, the structure, the processes, and perhaps most importantly, the culture of the organization to see if that’s something you want to donate your money towards.

Talli Sperry: Really helpful.

Kevin Wick: I would offer another thought, if I can. On a more kind of foundational level, if you can and if it works, if it’s a local charity, donate your time. Get involved and work with them. Get to know them. Even better, get your kids involved as we were talking about earlier. Allow them to spend some time there and get a feel for how they’re actually working sort of on the ground.

Talli Sperry: We really can get in the mix with these charities in more than just a check, can’t we?

Kevin Wick: Yes.

Al Weikel: I agree. I have one more point on that because you make a great point. It’s a site visit. A lot of clients will sort of finesse their due diligence approach based on the level of grant. You know, if it’s not a major grant, they’re not going to do too much homework here. If it’s a major grant, absolutely, they’ll do a lot of homework. And a site visit, to your point, with the family and/or the individual is a great way to go to get to know the organization.

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