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3 Ways Your Charitable Giving Could Go Bad

How Not to Pick a Charity

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3 Ways Your Charitable Giving Could Go Bad
Grove Pashley, Getty Images

Several years ago, a friend mentioned that she was including a certain animal sanctuary in her will. I knew that my friend was crazy about animals, and also that she is shrewd when it comes to money. So I checked out the organization she mentioned, fell in love with it and became a staunch donor.

That's how many of us find the charities we give to...through friends, relatives, the appeal we see on TV, or somewhere in the pile of fundraising letters we get. My relationship with the animal sanctuary has turned out well, but it could have easily gone bad.

There are lots of things you shouldn't base your charitable giving on, but here are three that you definitely should not do:

  1. Depend on Celebrities. A celebrity-founded charity, or one that they endorse, may or may not be a good investment of your charitable dollars. Even if you are smitten with a celebrity, check out the charities they endorse or helped start.

    Charity Navigator, a well-known evaluator of charities, compiled a list of celebrity-related organizations that were well or badly run. That list is an eye opener. For instance, Michael J. Fox received four stars(the highest rating) for his Foundation for Parkinson's Research. But the Andre Agassi Foundation for Education only got one star, and Dyan Cannon's Operation Lookout got a zero. Ignore the glamour and check out those celebrity-related charities before you commit. It only takes a few minutes to look up a charity at one of the watchdog sites, but it could save you major regrets later.

  2. Let the Stories Drive Your Actions.

    Almost all fundraising appeals include stories. Sometimes they break your heart, sometimes they make you smile or laugh. Stories are wonderful, and charities should use them. The story is meant to get you to open the envelope, click on the email, or write down a phone number.

    But stories should be backed up with facts. Facts about what the charity is doing, facts about its impact, and facts about how it handles its money and your donations. Stop, think, and do some checking before you write that check, click that donate button, or call the phone bank.

  3. Confuse Efficiency With Effectiveness.

    The charity watchdogs, such as Charity Navigator and the Better Business Bureau, are extremely helpful, but it is still very tough to evaluate just how effective a charity is. Just because a charity spends the bulk of its income on "programs" says nothing about whether those programs are really working.

    Instead of depending on obvious symbols such as efficiency graphs or even charity badges, dig around for more information that illustrates how an organization is actually making progress on its particular issue. This information is often right on a charity's website. Good examples include these pages from Camfed and KaBoom!. Don't hesitate to call the charity to discuss any concerns that you have, especially if you're making a large donation.

    Check out some newer charity evaluators that do measure the effectiveness of charities with techniques based on performance data as well as their finances. Examples include GiveWell and Innovations for Poverty Action. These organizations basically do the research for you and then recommend charities that meet their stringent standards for effectiveness.

The fact is that picking charities that match your passions, and that live up to their promises is not easy. But with some foresight, planning, and research, you can make your donations count for something good.

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