Things Donors Should Consider

Many individuals are uncertain which non-profit to support because they don't know which will most effectively use the monies. There are a number of factors to consider, and donors are correct to be careful. Simply because a charity supports causes that the donor believes in, may not be a sufficient reason for a donor to financially support that charity. In some cases, it might be best for a donor to support a larger, better known not-for-profit, while there are other circumstances when it may make more sense to support a smaller, local charity.

Some of the essential questions donors should ask before donating, include:

(1) What percentage of donations go towards actual programs or grants, and what percentage goes towards administration? There are great variances in the actual percentages that go towards each, and it is extremely important that organizations keep their overheads down. Donors must also clearly see that an organization has accomplished something constructive in its mission in the recent past, and on an ongoing basis, and has a well formulated plan as to how it intends to use future funds received.

(2) In addition to cash, what other donations does the organization accept? Does the organization accept items like cars and boats, and then liquidate them for cash? Does the organization take securities (stocks, bonds, etc), and what is the organization's policy regarding holding onto or selling the security? What is their investment reasoning? Does the organization contact manufacturers to supply relevant products in lieu, or in addition to cash donations?

(3) If the organization gives grants, what is the size of their corpus? What are the investments being used? Is the investment portfolio appropriate? What is the investment philosophy - - - preservation of capital; income; income with safety; growth; mixed? Who manages the portfolio and how often is it reviewed?

(4) Does the donor share a common ethic or goals or vision with the organization?

(5) Has the organization consistently filed timely Form 990's with the Internal Revenue Service, and the state, when necessary? Are the organizations financial statements and filings readily available for viewing by potential donors?

(6) Are the "books" reviewed, audited, etc.? How often? What is the report?

(7) Does the organization openly disclose its financials, including Profit and Loss Statements; Balance Sheets; and Investment Portfolio (including comparisons and actuals for a minimum of three years)?

(8) What is the organization's Grant Process, if it gives grants? Who determines who gets grants, and what is the application process? Is the Application Process publicized and open?

(9) Does the organization's operations, actions and activities appear transparent?

(10) Donors should contact several previous recipients and ask questions about their experience with the organization, etc?

(11) Donors should request permission to contact other previous donors, so they can check on their experience with the organization.

(12) Are there any apparent conflicts of interest between the Board members, Trustees, Officers, Staff Members, and projects/ programs the organization is involved in?

(13) Does the organization have any complaints filed against it?

Organizations should welcome donors that ask these questions, and actively assist the potential donor in feeling comfortable with the organization. Non- profits must realize that there is lots of competition for donations, and the non-profit that is most transparent and cooperative will make most donors the most comfortable.