We just got through the holiday season, which means we all received a tsunami of requests for donations from charities, New Commandment Men’s Ministries included. But more than a few of us may be experiencing “Giver’s Remorse,” a subtle regret that maybe it wasn’t so smart to shove that $50 bill into that solicitor’s hand.
So how does one evaluate a charity and keep the ulcers at bay?
Besides heading up New Commandment, I’m on the membership committee for National Coalition of Ministries to Men, which involves evaluating charitable men’s ministry organizations for membership. So I have some experience in this area. Here’s what I’ve learned about evaluating charities. (In parenthesis I’ll answer questions using New Commandment as an example.)
1. Does the charity have a website, a physical address and named leadership?
Almost all charities have a website these days. If they don’t have one, they’re either hiding something from the public or not utilizing an incredibly effective way to communicate and probably should be passed over for that reason alone. All non profit websites should list a physical address and name the person/people who are leading the organization. (New Commandment Men’s Ministries’ website is NewCommandment.org. Herb Reese (me) is President. The physical address of the ministry is 8274 Ammons Circle, Arvada, CO 80005.)
2. Do you personally know individuals involved with the charity and/or is the charity well known to the public?
A good way to validate a charity is to know people who are involved in it. Sans that, you can “crowd source” the validation process by giving to a charity that is well known to the public. (I personally know almost all of the donors to New Commandment Men’s Ministries. While New Commandment isn’t well known to the general public, it is well known within the men’s ministry community.)
3. Is the charity a 501 (c)3 and has it filed an up to date form 990 with the IRS as well as appropriate state forms.
Exempt organizations with income under $50,000 file a 990 postcard with limited information on it. Exempt organizations with incomes of $50,000 and above file a much more extensive 990 form. You can search to see if an organization has filed its Form 990 here. (New Commandment has an annual income that is less than $50,000 and has an up to date Form 990 postcard on file with the IRS.) Another way to check the 501 (c)3 status of organizations is to utilize online charity information sites such as GoldStar.com.
4. Does the charity have a board that meets regularly?
All 501 (c)3 organizations are required to have a board. Organizations with incomes of $50,000 or more are required to list board members in their Form 990. (New Commandment has a board that includes a President, Vice President, Secretary and Treasurer. It meets quarterly. None of the board members are family members related to me or to each other.)
5. What is the charity’s annual income and what are the sources of that income?
All charities have to have money to operate. Tax deductible charitable income and the sources of that income are public information. All charities must supply this information upon request. (New Commandment’s annual income averages around $42,000, with about half coming from donations, and the remainder coming from sales of books and DVDs, as well as honorariums from speaking engagements.)
6. What percentage of the charity’s finances go to fundraising?
Unless a charity is a foundation, charities have to raise money in order to operate. Generally, the more a charity spends on fundraising efforts, the less effective it is in accomplishing its primary purpose. (New Commandment spends less than 1% of its annual income on fundraising.)
7. What percentage of the charity’s finances go to programs and what percentage go to operations?
Programs are activities that accomplish the purpose of the charity. Operations are activities that support the organization in general. A higher ratio of money spent on programs vs. operations indicates a more efficient charity. (New Commandment spends about 95% of its income on programs and 5% on operations.)
8. What are the salaries of those in the organization making more than $50,000?
501 (c)3 organizations with gross income of $50,000 or more have to report the salaries of staff making $50,000 or more. (New Commandment’s gross annual income is $42,000. No one in the organization makes more than $50,000 a year.)
9. Is the charity a member of a financial accountability group?
Some charities have incomes in the millions, or even hundreds of millions of dollars. Charities of this size normally utilize independent accounting and certifying agencies. Large Evangelical Christian organizations often accomplish this by joining ECFA (Evangelical Council for Financial Accountability). ECFA does not recruit smaller Christian organizations with incomes less than $50,000. (Due to an annual income of less than $50,000 and the cost of membership to ECFA, New Commandment has not joined ECFA.)
In the end, it’s up to you to make sure your donor dollar goes as far as it can to accomplish what you want it to accomplish. Just a few minutes of due diligence on your part can ensure that it happens.
This post first appeared in NewCommandment.org.
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