Best Questions to Ask a Charity

Stan and I often seek out new charities when we are donating in honor or memory of someone else. These charities are off the beaten path for us. We don’t know as much about them and aren’t familiar with their operations. I know many of you are saving money with the purpose of increasing your giving levels. I found this list of questions to ask a charity from Money Magazine and thought they might be useful for you too.

1. Does the IRS recognize you are a charity?
No: You won’t be able to deduct a donation from your taxes?
Yes: Ask #2

2. How long have you been around?
Less than 5 Years: There are plenty of other charities that have proven track records. This doesn’t necessarily mean that a charity isn’t a legitimate option. A young charity can in fact be fabulous. Just be prepared to do more research to ensure that your donation will be used in the best possible fashion.
More than 5 Years: Ask #3

3. What percentage of my donation will go to charitable works?
Less than 75%: The charity may be run inefficiently
More than 75%: Ask #4

4. Do you have a year’s worth of working capital?
No: The charity may not have enough liquid assets to withstand the downturn.
Yes: Ask #5

5. Are you slashing services this year?
Yes: The charity could be shaky due to uncertain times. This isn’t necessarily a reason to abandon them but definitely look twice at what programs they are slashing. You wouldn’t want them to have already cut the one you want to fund!
No: This is likely a great charity that is well managed and able to withstand the downturn and help others.

These are very basic questions when searching out a new charity. Just because someone gives you a wrong answer doesn’t mean you should discount them. You just might have to do more research but if you just want to do a quick donation to an organization with a proven track record, these are great questions to ask.

You can also get background info on many nonprofits at Charity Navigator and Guidestar.

Thank You for Giving!