Know the charity

Charities have an obligation to provide detailed information to interested donors. Never give to a charity you know nothing about. Request literature and a copy of the charity’s latest annual report, including its annual consolidated financial statement. These often can be found on an organization’s website.

A consolidated audit provides a more complete picture of a nonprofit’s operations because it includes the financial activities of multiple legal entities and eliminates interorganizational transactions. Charity tax filings frequently contain self-reported information intentionally designed to frame the charity’s financial activities in the best possible light. Audited financial statements are more reliable sources since they are produced by third-party certified public accountants

If a charity does not provide the information you requested, you may want to think twice about giving to it.

Find out where your dollars go

Ask how much of your donation goes for general administration and fundraising expenses and how much is left for the program services you want to support. Most highly efficient charities spend 75% or more on programs.

You can calculate a nonprofit’s cost to raise a dollar, a common metric used to calculate fundraising efficiency. Divide the total spent on fundraising (included in the consolidated financial report) divided by the unrestricted revenue raised.

Do not feel pressured into contributing on the spot. If you are not familiar with a charity, request additional information in writing and inspect it carefully. No legitimate organization will pressure you to give immediately.