Friday, June 14, 2013

Baby Steps to a Better World Part 2 - Donations

The Wide World of Donations

This week we’re going to talk about the most obvious form of charity support…cash. Many people want to donate but there is a tug of war between family budgets and charitable giving. Food, rent and vacations take priority and there is nothing wrong with that. You and your family don’t have to do without just so a charity can have funding to keep its doors open. 

Let’s start by looking at the way donations really work from the perspective of the organization.

Misconception #1: Unless you’re giving hundreds of dollars to a charity, your contribution doesn’t mean much.

Wrong! People who have the means, give hundreds or sometimes thousands to a charity but that doesn’t represent a majority of donors. Most people are average citizens just like you with the same budget issues you have. While the large donations are important to any charity, the ones they value the most don’t have anything to do with the size. It’s all about consistency. Organizations need money they can depend on month after month and those payments are their lifeblood. You can give hundreds of dollars a month if you have it but most of them will accept amounts as low as $10 or $15 dollars.

What if you’re living paycheck to paycheck and you can’t afford $10 a month? No problem. This is also a buddy donation opportunity! Find a friend who wants to give to the same charity. Find a group. Pool your one or two dollars into a small donation and send the organization a check each month.

What if you can’t afford even $2 a month because you have trouble paying your bills as it is? Many local charities have stores that sell donated items (used furniture, clothing, books, etc.). Next time you need a new pair of jeans or want to splurge on a $0.50 book get it at their store. The money goes to help the charity so you get something and so do they.

 This also works the other way. If you have a closet of clothes you no longer wear or things you never use instead of throwing them out donate them to a charity. Then they can sell them and use the money to support their cause.

Misconception #2: One charity is as good as the next.
Wrong! Just like people, some organizations are no good with money. They expend more cash each year running the charity than they do helping the people or animals they claim to help. When half of donations go to “administrative costs”, it’s a bad charity. That doesn’t mean it’s a scam. It just means most of what you give will go to paying their rent or the president’s salary. Make no mistake, some well-known charities have offices in fancy buildings in the expensive part of town and pay their president enough to afford a mansion on the hill. I’ve seen it first hand and it happens a lot more than you think.  Paying for their new Lexus is probably not what you intend when you give them money.

You want an A+ rated charity that gives 90% or better to the cause and only uses 10% for administrative expenses. Anything less is a group that doesn’t handle your money wisely. How do you find these charities? You get to do a bit of sleuthing!

First, get the name of the charity. Many of these groups sound alike so make sure you have the right name. Second, go to a charity-ranking website that has already done the work for you. Then you plug in the name and see what comes up. There are several different ranking organizations you can use:

US: Charity Watch (aka American Institute of Philanthropy)

US: Charity Navigator

US: Better Business Bureau

Canada: Charity Intelligence

Canada: Better Business Bureau

Unfortunately there aren’t many organizations outside the US and Canada that track charities. In that case, it’s best to stick with well-known groups that have a long-standing reputation. That doesn’t mean you can’t give to any organization that strikes your fancy. If you feel comfortable donating then donate. It’s the thought that counts.

Spotting a Scam

Spotting a scam is one of the most important aspects of giving to charity. Before you give any amount of money, make sure you know where it’s going. Always be wary of anything that says “a portion of the proceeds go to charity”. “A portion” could easily mean they are giving a grand total of $5 to charity and pocketing the rest. Anytime you read or hear that statement it’s a good idea to be suspicious and ask for clarification. Events or auctions that benefit a charity will always boast that 100% of the profits go to charity. They don’t hide behind wording and lead you to assume something that isn’t true. They will spell it out. It’s ok to ask questions and a legitimate charity won’t mind answering them.

If a charity calls you asking for donations NEVER give your bank account or credit card information over the phone even if you recognize the name of the group. There is no way to tell if that person really works for the charity regardless of the pitch they give you. Remember, scam artists are professionals. They will attempt to sound as realistic and convincing as possible. If you want to donate to that organization, go to their website. You can either donate on the site using a credit card or get their address and mail them a check. If they push you to donate over the phone then they’re most likely not what they pretend to be.

A Word about Celebrity Endorsements

Many a scam has been perpetrated by someone claiming a celebrity connection. People use a recognizable name to get your attention in the hope you’ll be so excited you won’t bother asking questions. They promise all sorts of things from a chance to meet that celebrity to some sort of special gift from them. They don’t mention that the “random” drawing at the end of the campaign isn’t random and the prize goes to a friend of the organizer. They don’t admit that they haven’t been in contact with the celebrity and don’t have their approval or support so the promise to meet that person is a hoax. Just like with any other charity, always investigate the organization before you give them any money regardless of the prize offered. Don’t assume the celebrity knows about the event, raffle, etc. or has any idea what was promised in their name. They are only human. Sometimes even public figures trust people they shouldn’t and unfortunate things happen behind their back without their knowledge.

Next week…volunteering: how you can help with limited time or even health restrictions!

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