In an age with so many charitable non-profit organizations out there, it's important to be able to understand how your nonprofit of choice is using the money that you donate to them. After all, the last thing you want is to have your hard earned donation funds being used just to fatten up the bank accounts of a bunch of executives and management. So how can you check to make sure your charity of choice is maximizing how your donations are being used?
Check Your Charity's Annual Financial Report
Every non-profit organization is required to make their financial reports publicly available, and you can usually find it on their website. For example, on our partner site Water.org, you can easily find their financial reports under the About Us menu. You can then download a complete financial report for the year of 2016 as a pdf, which will show you all of their earnings and expenses, with breakdowns of how their money was spent and how effectively it was used.
Here's what you should be looking for:
- Allocation of Expenses: How much of its donations is your charity spending on its stated mission? Generally you want to see at least 80% of a charity's donation revenue being spent on its mission.
- Impact: How many people have been reached and helped by this charity, and who are they? What demographics and locations are being helped? Also is that help sustainable or short term?
- Efficiency: How well are the donations being spent? Are they being used for the maximum amount of benefit?
Check your Charity's Rating on Third Party Sites
Sometimes it's good to get a 2nd opinion from an impartial source, and there are many websites out there that can tell you objectively how well and how much good a charity is doing with its donations. Here are some great websites you can use to help you evaluate your prospective charities.
Being equipped to critically evaluate the recipients of your prospective donations is extremely important. Water.org is an organization that meets up to all of these standards to the highest degree. For every dollar the receive in donations, 83 cents is put into fulfilling their mission of bringing clean water to the most vulnerable populations in the world. They are able to do this extremely efficiently by using their funds to create innovative investment opportunities with private firms that allows them to make a larger impact with a small amount of money through private partnership and innovative solutions, such as microloans and microfinance through their WaterCredit program.
Just take a look at Water.org's credentials for yourself, by making a donation you will be helping give millions of people around the world access to safe and clean drinking water through innovative thinking and sustainable means.