In a politically and socially fraught world, charitable giving isn’t so simple. There are steps you can take to make sure your gift has the desired impact.
Recently, universities have been caught up in free speech debates over the Hamas-Israel conflict and some large donors have halted gifts in response to the conflict and perceived anti-Semitism on campus.
Even before that, donors were cutting back. Total U.S. donations fell 3.4% to just under $500 billion in 2022, according to Giving USA, which tracks the sources and uses of charitable giving.
To ensure the charities you want to support match your passion, it takes more work than just writing a check. Here are four tips to help donors make smart giving choices.
Understand your goals and the organization’s mission.
Even if you are familiar with an organization’s programs and missions, conduct due diligence, such as volunteering, calling the fund-raising team and meeting with leadership.
Jane Mentzinger, chief executive officer of Communities In Schools of Chicago, an educational nonprofit working with Chicago public school students, often meets with donors. She recommends potential donors ask leadership about the organization’s mission, what data they have, short-term and long-term strategic goals and plans, and how those align with the mission.
Donors should consider what they want to accomplish philanthropically with the charity, how they define success and what success looks like, says Karen Kardos, head of philanthropic advisory at Citi Private Bank.
Ask about the group’s financial stability and review the charity’s tax filing, IRS Form 990. This form outlines a group’s revenue sources and how it spends money. Some charities will put links to their Form 990 on their website, while Candid and Cause IQ also have updated Form 990 data on charities.
The first step is clarifying whether the charity is right for your interests—or not. “They might have a great name and they might have a great mission. But when it gets to how they do the work, it might not be a way that you think is the right angle on it,” says Eileen Heisman, CEO of National Philanthropic Trust.
Pick the right form for your gift.
There are two types of gifts. Restricted gifts can only be used for the stated purpose, such as supporting certain programs or a capital campaign. Unrestricted gifts give charities leeway to use the money, including behind-the-scenes necessities like buying equipment or paying staff. Donors should ask about fund-raising goal targets and how their contributions will be used, Mentzinger says.
Gifts can also be restricted by time. John Campbell, head of wealth planning and trust services at Calamos Wealth Management, recommends donor advised funds for larger, multiyear pledges. DFAs give donors immediate tax breaks based on the total amount transferred to the vehicle, and funders can dole out the money over time. It offers donors greater flexibility with their giving, since they decide who gets funded at what time and when to stop giving.
So if you put $50,000 in a donor-advised fund, you get an immediate tax deduction for the full amount, but you can give that money to charities over many years. One thing to remember: Once you put the money in a donor-advised fund, you can’t get it back, so be sure you can afford a gift of that size.
Handle disagreements with a charity politely but firmly.
Ideally, donors will call or email a charity regarding their concerns or disagreements, Mentzinger says.
That allows donors to offer input and guidance, while the charity can explain context or offer other information to resolve many issues. Most donor concerns come from changes in programming or leadership.
“It doesn’t mean everybody’s always going to agree,” she says. “ Ultimately, I think an organization has to stay true to its mission, its vision and its values.” she says.
Donors also need to remember that many charity recipients, such as universities, must weigh the needs of the different parties, Kardos says. Just because you have given money doesn’t give you complete control over a charity.
“It should not be that the funder is above the grantee,” she says. “They should be on the same level in terms of ‘we’re in this together. I want to see you succeed; how can I help you succeed?’”
Don’t expect instant results
Charities should be able to show progress on their mission and their programs, but donors should also be cognizant that making an impact takes time.
Larger charities may share qualitative and quantitative data with donors, while smaller groups should be able to talk about where the charity is today and where they see themselves going in a few years, with specific strategic goals around it, Mentzinger says.
Heisman reminds donors there is a difference between outputs and outcomes. For example, an organization can count how many impoverished children they have taken to see the orchestra for free, but it’s harder to measure long-term effects on a child’s future.
“Does it make the kid more creative? You might not know that for 18 years, or 20 years. That doesn’t mean you shouldn’t do it,” Heisman says.
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