6 Things to consider when deciding which charities to support

Well, autumn is here and if you haven’t made your charitable contributions yet for 2015, time is running out (you have until December 31st for the donation to count for the 2015 tax year). It amazes me how many charities are available to Canadians – over 86,000! Most charities are reputable organizations doing good for their cause or community. That said, they’re not all created equal; so, how do you decide? Here are six things to consider.

1. Overhead

Where exactly is your dollar going? Many of the larger charities have, simply due to their size, developed a significant amount of administrative overhead. Every charity needs to spend money on certain administration—whether it be a place to work, office supplies, salaries, etc. — but most people want the substance of their donation to go towards the cause. Another cost for charities is how much they spend on advertising (i.e., to get you to donate). You don’t want to see too much of your money spent on marketing, mail-outs, lotteries, and/or gala events. Charity Intelligence Canada provides a list of four-star charities which are ranked according to their social results reporting, financial transparency, program cost average, and fundraising and administrative costs. If you are interested in developing a better picture of where your money is going, this is a good place to get started.

2. Where the charity works

Many people like to influence (and see first hand) where and how their donation dollars are being used, and the impact their donation will have on the people or cause that the charity claims to support. Maybe it’s a donation to a hospital or the new community center. If you want to change your community, there may be a community foundation where you live. Others may want to impact the global community, helping improve the lives of those living in less fortunate conditions in developing countries.

3. How does the charity help?

Does the charity have a clear, well-thought-out mission statement? What are its values? Does it run around doing a million things responding to every donor whim?

4. Volunteer if you want the truth

Volunteering with a charity will let you see first hand if it’s a charity you wish to support. We are all busy and burdened with obligations, but if you want to know if a charity is “good,” there is no substitute for rolling up your sleeves, and volunteering.

5. Bigger is better, right?

There are perceptions about the quality of a charitable organization being relative to its size, but the truth is that both big and small charities can be efficient and effective – or not. Other factors that will affect the character of a charity are the amount of volunteer effort or how the charity is financed. Those that receive government funding tend to have more paid staff (are bigger) and are more “professional,” but they’re not necessarily better (or even more efficient).

6. Governance

How well governed is the charity? Does their board have credibility and is it actively engaged – not just rubber stamping everything? Is the board talented and diverse? What is the tenure of the executive director(s)? Where have they worked previously?

Hopefully, these tips will help you with your decision. The fact that you are willing to donate is amazing in itself. According to Statistics Canada, in 2010 over $10.6 billion was donated by Canadians to charitable or non-profit organizations. Congratulations on being part of the many who are working to help change lives.

Terry Willis has almost 20 years’ experience in financial services, with particular expertise in working with professional athletes. He helps young athletes put financial plans in place from their earliest money-earning playing days, throughout their careers and into retirement. Terry also specializes in assisting clients with charitable donations and legacy giving, helping them maximize benefits to the recipients without jeopardizing their own financial security.

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These articles are for general informational purposes only. Please obtain professional advice before taking any action based on this information. No endorsement or approval of any third parties or their advice, information, products or services should be implied by any references to third parties contained in any article. Trademarks cited in these articles are the respective properties of their owners.

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