We are often asked about the worthiness of specific charities.
People want to support good causes, but they don't want to have
their money wasted.
How can you learn more about a particular charity? The traditional
advice - check with the Better Business Bureau - is fine except
for one important fact: this service rates only a few hundred of
the more than 734,000 charities in this country. It focuses on mostly
large national charities, not smaller, often local charities.
- See if a charity is in this website.
You can get a complete list of charities in this website by
clicking on All Charities A to
Z. Only charities that are part of the federal government's
charity drive (called the Combined Federal Campaign, or CFC)
can be in this site. That means they have all met 10
accountability standards. They must have low fund-raising
and administrative costs (we note the percentage each charity
spends on administration and fund raising). They must have an
annual audit (the only exception being very small, local charities.)
- Check to see if a charity is in the federal
government's charity drive.
This website - CharityChoices.com -- does not include all CFC
charities. You can see the entire list of national and international
charities by going to the CFC website: www.opm.gov/cfc/03-lists/2003NationalList-AlphaIndex.doc.
This will give you an alphabetical index of more than 1500
charities that have met the federal campaign's 10
accountability standards.
To learn more about any of these charities, first note the
charity's 4-digit CFC number. Then go to www.opm.gov/cfc/03-lists/2003NationalList.doc.
This is a Microsoft Word file with each charity's name, 25-word
description, web address, phone number and the percentage it
spends on overhead.
To find the charity you want to check out, do a search on its
4-digit CFC number or on its name. (From Word's "Edit"
menu, go to "Find" and type in the charity's number
or its name.) To find the charity's mailing address, go to each
charity's website or call the charity.
Unfortunately, it is harder to find out if a local charity
is part of the CFC. There are more than 300 CFCs throughout
the country. You can find a list of them organized by state
at www.opm/cfc/localcampaigncontact.asp.
Most of these local CFCs do not have websites so you can't easily
find a list of local CFC-eligible charities.
In the Washington, DC area you can find a list of all CFC-eligible
charities. Go to www.ncacfc.org/searchpledge.cfm.
Click on "Continue to Charity Search." You can then
search the index of all CFC-eligible charities by clicking on
the first letter of the charity's name. You will get the charity's
phone number, 25-word description of its work and the percentage
it spends on overhead. You can also search for charities by
zip code to find a charity that is working in your community.
Once you find a charity, you can click on "more information"
and find its mailing address, website address and financial
information (such as total budget size) if it is available.
The only problem with this source of information is that it
can be very slow if you don't have a high-speed connection.
- Check the Better Business Bureau's
Wise Giving Alliance's website: www.give.org/reports/index.asp.
Here you will find a list of more than 600 national charities
that the BBB has attempted to rate. However, of these charities,
many have not provided the Bureau with current financial information,
so they are not rated. Of 10 we randomly checked, four had not
submitted the information the Bureau had requested. Of course
the fact these charities haven't responded to requests tells
you something.
For charities that had submitted the information, when you
click on that charity's name you will get its contact information,
financial information and whether it has met all of the Better
Business Bureau's 23 standards for charities (www.give.org/standards/cbbbstds.asp).
If it hasn't met some of those standards, the Bureau notes which
ones and why.
Unfortunately, finding information about local charities can
be difficult. You can enter the name of a charity into the search
engine at Search.bbb.org.
We tried Alzheimers Association of Greater Washington. We got
a list of more than 150 possible organizations. Even when we
narrowed our search to the state (Virginia) where this charity's
office is located, we got 150 possible matches, which included
every Virginia-based organization with "Association"
in its name. Narrowing the search to "Alzheimers"
in Virginia still did not find the chapter we were searching
for.
When we went to the DC-area BBB our search for the Alzheimer's
Association also came up empty. To find your local BBB, go to
www.give.org/index.asp
and click on "Find a local BBB."
The BBB's charitable giving website (give.org)
also has some very useful advice about giving (www.give.org/tips/giving.asp).
See especially tips on "Contributing Used Cars to Charity"
and on "Police and Firefighter Organizations."
- To get financial information about nearly
every charity in the country, go to www.Guidestar.org.
Guidestar calls itself "the web's clearinghouse of information
about nonprofit organizations." It has a huge database
of information about charities.
For most charities it has their "990 annual reports,"
which is the information report that charities with budgets
above $25,000 must submit each year to the IRS.
Glancing at a charity's 990 report can give you exactly the
information you want to decide if you should think about supporting
a particular charity. That information is how much the charity
spends on "Services," "Management and general"
and on "Fundraising."
Here's how you do it. When you go to guidestar's website, click
on "Advanced search." Enter the charity's name. Enter
any other information you have about the charity. The guidestar
search engine should lead you to information about that charity.
The initial information you find may be enough for you. It
will include the charity's contact information, a short description
of what it does and a summary of its financial information.
You can learn more by clicking on "990 report." To
get a report, you must register with Guidestar, a fairly simple
process for which there is no charge. Once you have done that,
you will get the 990 for the charity (often the 990 will not
be for the most recent year because of how long it takes the
IRS to process these returns and get them to Guidestar).
A 990 can be a very long document. But you can get what you
need quickly. At the bottom of page 1 you will find the charity's
total revenue. On page 2, look at lines 13, 14 and 15. Line
13 is the amount the charity spent on its services. Line 14
is the amount it spent on "Management and general."
Line 15 is what it spent on fund raising.
Add lines 14 and 15. Divide the charity's total revenue into
the total of lines 14 and 15. This will give you the percentage
the charity spends on administration and fund raising. The Better
Business Bureau suggests that this percentage should be under
35%. The federal government's charity drive (the Combined Federal
Campaign) wants it to be under 25% (though it will allow charities
to participate in the CFC with higher expenses as long as they
submit a plan for lowering these expenses).
A red flag is when a charity's fund raising expenses equals
or exceeds what it spends on its services.
But there is a very important caveat when you examine this
information: there are very legitimate reasons that some charities
will have relatively higher fund raising and administrative
costs. It may be new. It may have a cause that does not have
wide appeal, which makes it harder for it to raise money. It
may not get a lot of large grants from foundations or corporations,
which means it has to rely on small contributions from individuals,
which cost more to raise. (See how to
decide for more on this issue.)
Another interesting piece of information you can find on the
990 report is how much the charity pays its five top employees.
You will find this on "Schedule A."
Again, try not to make a quick judgment about this information.
Many large charities pay their executive directors an amount
that many people would think is a lot. In defense of these salaries,
many charities point out that directing a large charity that
may have hundreds of employees and needs to raise millions of
dollars each year is a very demanding job. The median salary
in 2002 for executive directors of the largest charities in
the country was $282,712, according to a survey done by The
Chronicle of Philanthropy. The average salaries for executives
of smaller charities is often a fraction of this amount.
- Ask the charity itself for information about
its work and finances.
Charities are now required to make their 990 annual report
available on request. They must make the 990 report available
during regular business hours or on the Internet.
Journalists also can request copies of the 990 from the IRS
Exempt Organization center in Ogden, Utah, under the Freedom
of Information Act. A charity does not have to include its list
of donors, which is protected under privacy laws.
If a charity is reluctant to send you their 990 or other information
about its work such as an annual report, that is an organization
you probably do not want to support. Charities enjoy two big
public benefits: their income is tax exempt and donations to
them are tax deductible. As a result, charities have an obligation
to be accountable to the public.
