Maximizing the Impact of Your Charitable Gift: Tips for Vetting Charitable Organizations

May 12, 2020
During this time of need, many people are looking to make an impact with charitable giving. Wealth Planner Nicole Jackson Leslie shares how you can vet your chosen charity.

There are many ways to give to charity. You can make a direct contribution using cash, appreciated securities or other assets, or you can give through vehicles such as a private foundation, donor-advised fund or charitable trust. But how can you ensure your good will is carried out after your contribution is made? Read on for tips on vetting a charity to make sure your decision to make a gift is an informed one.

Make Sure the Charity Is in Good Standing. You can confirm whether a charity is in good standing through the Tax Exempt Organization Search function on the IRS website. Search for a charity by name or employer identification number to find out when an organization was first recognized as tax-exempt, whether its tax-exempt status has been revoked and whether contributions are tax-deductible.

Conduct a Financial Health Check. Charitable organizations are required to make their three most recent tax returns available to the public. Review a charity’s tax returns (Form 990-PF for private foundations and Form 990 for other exempt organizations) and supporting documents for information relating to its annual income and expenditures, including grants made and salaries paid. Federal returns can be found on the IRS website or through other services, such as GuideStar. Returns for the state(s) in which the charity is registered can be found on the state’s attorney general website.

Go beyond the numbers and review the organization’s most recent annual report for more detailed information on what a charity has done in the past year to further its purposes. Annual reports are often available on the charity’s website and include information on its budget, fundraising efforts, programming and goals for the next year and beyond.

Get Involved. If you really want to get to know an organization before you donate, consider reaching out to see if volunteer opportunities are available. In addition to a financial contribution, you would be donating another valuable resource – your time – while gaining an insider perspective on how the charity allocates resources and serves its community. Volunteering will also provide opportunities to get to know the charity’s leadership, staff and the population it serves, which may inform your decision of whether and how to give.

Volunteering can be difficult during these times while we practice social distancing. Some organizations may have opportunities to volunteer remotely, but If you cannot get involved just yet, contact the charity you are interested in and ask if you can interview current volunteers, donors or board members. Hearing about their experiences and opinions on the organization’s leadership, vision and impact will help you get comfortable with the organization even if you cannot be there in person.

Beware of Scams. Unfortunately, there are scams out there that take advantage of others’ generosity, especially during a time like this when people are eager to help those in need any way they can.

The tips listed above should help you rule out any illegitimate charities, but if something still does not feel right, check with your state’s attorney general office. Throughout the COVID-19 crisis, many offices have compiled lists of fraudulent organizations and fundraising schemes.

As always, be wary of phone calls and emails soliciting donations, especially for cash or gift cards. Do not provide account numbers, wiring instructions or other personal information without verifying the recipient organization.

Rely on Your Network. Tap into your personal and professional network to learn which charities are in line with your mission and will help further your philanthropic goals. Ask family, friends, colleagues or advisors who sit on nonprofit boards to tell you more about their involvement. Use these contacts to learn more about an organization’s financial health, reputation within the community and vision for the future.

If you have a cause in mind but are not sure where to start, reach out to a community foundation for guidance. These foundations often have long-standing relationships with numerous charities and may be able to make introductions to leaders within those organizations and other philanthropists who share your interests.

Finally, ask your advisors for guidance. If you are contributing through a donor-advised fund, the fund manager may have professionals on staff who can help you sort through charities and guide your research. Your trusts and estates attorney may also be familiar with organizations related to your cause.

Brown Brothers Harriman (BBH) has many tools available to help guide your philanthropy, from identifying your mission to conducting due diligence on charitable recipients. Reach out to a member of your BBH relationship team for more information on our philanthropic advisory services.

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