Best Practices of Savvy Donors
Be Proactive In Your Giving
Smart givers generally do not give reactively in an unthinking reaction. They do not respond to the first organization that appeals for help. They take the time to identify which causes are most important to them and their families. In addition, they are specific about the change they want to affect. They do not just support generic cancer charities, but instead have targeted outcome goals for their giving.
Hang Up the Phone / Eliminate the Middleman
Informed donors recognize that for-profit fundraisers, those primarily used in charitable telemarketing campaigns, keep 25 to 95 cents of every dollar they collect. These donors never give out their personal information – like credit card accounts, social security numbers – over the phone. If they like what they hear in the pitch, they will hang up, investigate the charity on-line and send their contribution directly to the charity, thereby cutting out the intermediary and ensuring 100% of their donation reaches the charity.
Be Careful of Imposters and Sound-Alike Names
Uninformed donors are easily confused by charities that have deceptively similar names to others. How many of us could tell the difference between an appeal from the National Cancer Center and the National Cancer Coalition? Their names sound the same, but their performances are vastly different. Informed donors take the time to uncover the difference.
Confirm 501(c) (3) Status
Wise donors do not drop money into canisters at the checkout counter or hand over cash to solicitors outside the supermarket. Situations like these are irresistible to scam artists who wish to take advantage of your goodwill. If for no other reason than they want to take the tax deduction, smart givers only support groups granted tax-exempt status under section 501(c) (3) of the Internal Revenue Code.
Check the Charity’s Commitment to Donor’s Rights
Obtain Copies of Its Financial Records
Savvy donors know that the financial health of a charity is a strong indicator of the charity’s programmatic performance. They know that the most efficient charities spend at least 75% of their budget on their programs and services and less than 25% on fundraising and administrative fees. They understand that a charity’s ability to sustain its programs over time is just as important as its short-term day-to-day spending practices. Therefore, savvy donors also seek out charities that are able to grow their revenue at least at the rate of inflation, that continue to invest in their programs and that have some money saved for a rainy day. Savvy donors ask the charity for copies of its three most recently Forms 990. Not only can the donor examine the charity’s finances, but also the charity’s willingness to send the documents is a good way to assess its commitment to transparency.
Review Executive Compensation
Sophisticated donors realize that charities need to pay their top leaders a competitive salary in order to attract and retain the kind of talent needed to run a multi-million dollar organization and produce results. However, they also do not just take the CEO’s compensation at face value; they benchmark it against similar-sized organizations engaged in similar work and located in the same region of the country. In general, salaries tend to be higher in the northeast and at arts and education charities. Sophisticated donors also put the CEO’s salary into context by examining the overall performance of the organization. They know it is better to contribute to a charity with a well-paid CEO that is meeting its goals than to support a charity with an underpaid CEO that fails to deliver on its promises.
Start A Dialogue To Investigate Its Programmatic Results
Although it takes some effort on their part to assess a charity’s programmatic impact, donors who are committed to advancing real change believe that it is worth their time. Before they contribute, they talk with the charity to learn about its accomplishments, goals and challenges. These donors are prepared to walk away from any charity that is unable or unwilling to participate in this type of conversation.
Concentrate Your Giving
When it comes to financial investments, diversification is the key to reducing risk. The opposite is true for philanthropic investments. If you have really taken the time to identify a well-run charity that is engaged in a cause that you are passionate about, you should then feel confident in giving it a donation. Spreading your money among multiple organizations not only results in your mail box filling up with more appeals, it also diminishes the possibility of any of those groups bringing about substantive change as each charity is wasting a large percentage of your gift on fundraising and overhead expenses.
Share Your Intentions and Make a Long-Term Commitment
Smart donors support their favorite charities for the long haul. Again, they see themselves as a partner in the charity’s efforts to bring about change. They know that only with long-term, committed supporters can a charity be successful. They do not hesitate to tell the charity of their giving plans so that the organization knows it can rely on the donor and the charity does not have to waste resources and harass the donor by sending numerous solicitations.