How to donate your money more wisely

Caution:  This article contains graphic images that may help some people make more informed decisions about donating money.

Ever wonder how much of the money you give to a charitable cause actually finds its way into the hands of the people that need it?  Well, you can find that information and most anything else you want to know about a specific charity by using independent organizations that rate the quality of charitable organizations.  Two of the more well-known organizations are Charity Navigator and CharityWatch. Both have very useful websites and information to help evaluate charities. 

Charity Navigator’s scoring system uses stars (1-4) to show quality of charities, based on rating charities on a 100 point scale for financial health, and accountability & transparency.  CharityWatch allows you to quickly search for top-rated charities by category and rates the charities with a letter grade (A+ to F) based on percent spending on programs (versus overhead) and fundraising costs. Either one is sufficient for evaluating a charity but I prefer Charity Navigator due to breadth of charities covered and the amount of data available on each charity.

I’ll use a personal example to show you how to use these tools to make more informed decisions. Every year we make a holiday donation in honor of my mother.  The donation is for a cause we know she supports, but we select the specific charities. This year we will be donating to breast cancer research in her honor.

Using Charity Navigator I found two charities focused on breast cancer research with 4 stars (see exhibit below). When comparing the two, I discovered that the Breast Cancer Research Foundation funneled more donated money to programs and spent less on administrative overhead.  As an additional measure, I checked out CharityWatch and found that the Breast Cancer Research Foundation received an “A+” rating.

I now feel good that we’re not only making a charitable donation to a worthwhile cause but also giving our money to an organization that will put most of it into the hands of the people that need it.

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