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Give
Wisely To Charity
When it comes to
charitable giving, one person's cause can be another person's
cringe.
That's why we compile our year-end evaluation of 200 large
nonprofits from the perspective of a would-be donor on the basis of
largely neutral numbers: financial efficiency ratios. They are
telling, and a good place to start research, but we would be the
first to admit that numbers don't tell the full story.
Assuming you itemize, tax preparers like those at H&R Block (NYSE:HRB
- News) or the Jackson Hewitt unit of Cendant (NYSE:CD - News)
ensure you get a charitable deduction for your donation if the
recipient has been approved by the Internal Revenue Service as a
tax-exempt nonprofit. This is usually called a (501)(c)(3), and it's
a status not too hard to achieve: 1.4 million such nonprofits abound
around the U.S. The IRS maintains a reasonably current list
onlineOur list of "America's Most (And Least) Efficient Charities"
excludes colleges and other educational institutions for a simple
reason: They generally don't solicit funds from the public at large
but rather from their own alumni, who might not care much about
things like excess fundraising costs, overhead and need. To this we
say, fine, especially if you're satisfied with your education there.
In our experience, colleges generally have higher fundraising
efficiency--the percent of gifts left after subtracting the cost of
generating them--than public charities but lower donor
dependency--the percent of gifts less surplus--often thanks to large
endowments.
On our list, the average fundraising efficiency--probably the most
closely scrutinized ratio--is 89%, meaning that 11 cents of each $1
raised go to raising the funds. We long have recommended being wary
about nonprofits whose fundraising efficiency falls below 70%.
But different kinds of nonprofits can have different norms for this
statistic. For example, contributions to a dozen or so nonprofits on
our list consist overwhelmingly of donated goods from big companies
and governmental agencies. This group includes Gifts-In-Kind
International, Feed the Children, Food for the Poor and AmeriCares.
There is next to no cost in soliciting these relatively large gifts,
which is why fundraising efficiencies here approach 100%. But that
doesn't automatically make them more meritorious than nonprofits
that have to solicit piecemeal and have lower fundraising
efficiencies.
Internet technology and changes in federal tax rules--plus the
realization by nonprofits that transparency encourages
donations--make it easier than ever to get solid information about
nonprofits. Upon request, most nonprofits will send you an audited
financial statement, the latest IRS Form 990, which contains much
information and provides the bulk of the data for our listings, as
well as some promotional literature. Some post all this on the
nonprofit's Web site. To figure out trends, you often can find old
990s at www.guidestar.org. The Better Business Bureau's Wise Giving
Alliance has a free Web site, www.give.org, which pulls together
data on hundreds of U.S. nonprofits. Evaluations of religious
nonprofits, including many not required by law to file a Form 990,
can be found at the Wall Watchers site, www.ministrywatch.org.
Our data can be helpful to starting an evaluation of nonprofits not
on the list. Say you're interested in contributing to a local food
bank. Several large ones are on the list, and their ratios can
provide an idea of the norms for such enterprises.
However, do not underestimate what you can find out about a
nonprofit that interests you by hitting the phones, checking online
databases of local newspapers and generally asking around. In the
end it's your money, and you should treat making a charitable
donation like making an investment. Source:
NEWS.YAHOO
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