How Charities Spend Your Gift Donation – Is it Honest?


Charities: How They Spend Your Gift Donations

Recent media reports have made it apparent that well-intended charitable gifts are not always spent in the manner in which their donors intended. All too often, unwitting donors impulsively give into the urge to donate to what appears to be a reputable and worthy charity, only to later discover that the charity misrepresented itself or was actually a for-profit organization, which can keep up to 90 percent of its donations.

Unfortunately, scam artists who pose as members of a charitable organization soliciting donations operate on a regular basis, and it can be difficult to distinguish between a real charity and a fictional one. As a result, it is increasingly important that donors fully research the charities to which they intend to make donations before doing so, in order to ensure that their dollars are truly being applied to the causes that they wish to support.

Researching Charities

Many resources are available to help potential donors learn which charities are reputable and how they spend the majority of funds that they receive as donations.

  • All non-profit organizations must file Form 990 with the IRS. This form provides detailed information about the organizational mission, programs, and finances. The general public can access Form 990s for over five million organizations by simply creating a free account at Guidestar.
  • Other organizations provide ratings of charities for donors, as well. Givewell focuses on how a program’s charities work.
  • Charity Watch evaluates the financial reporting of charities based on the documents that they submit, and assigns each charity a letter rating.
  • Charity Navigator, another resource rates 5,500 charities based on their levels of fiscal responsibility and commitments to accountability and transparency.
  • Another effective method for investigating charities, especially on a local level, is to pay a visit and ask questions. Organizations that are seeking donations should be happy to welcome you into their facility and answer any questions that you might have.

How Charities Spend Their Funds

Overall, a charitable organization that is well-managed should typically spend:

  • About 75% of its budget on providing programs and services, and the remaining 25% of its budget on fundraising and administrative costs.
  • Salary levels for non-profit CEOs hover at a median level of $150,000 per year, but this figure varies widely based on the organization’s location, size, budget, and various other factors.

When comparing charities, a prospective donor should take care to only compare charities of similar sizes and locations with one another in order to gain a true sense of what sorts of administrative expenses and salaries are reasonable under the circumstances.

Educate Yourself on Charities

Finally, and perhaps most importantly, take your time before you decide to commit your hard-earned dollars to a particular charity. Instead of giving on impulse to donate to a charity:

  • First research the charity in question
  • Decide whether it is truly worthy of your donation, and how you want your donation used.

Taking these simple steps can help ensure that your dollars are used in the best and most effective manner possible to support the cause that is closest to your heart. Helping you to make a difference in the world we live in.

Additional Resources


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