How to Pick the Best Charities to Donate to This Holiday Season

Many of us feel a heightened sense of generosity when the holiday season rolls around. It is the season of giving after all! But before you donate your hard-earned income to a charity, make sure you know where you’re actually sending your money. 

Unfortunately, many charities are not trustworthy these days, taking a bigger piece of the pie than they should and being dishonest with people’s donations. We have advice to help you choose your charity wisely this season, so you can genuinely support the cause you care about.

1. Scrutinize Financial Health

Where exactly is the money going? Examine the charity’s financial statements and tax forms (Form 990 in the US). Look for organizations that spend at least 70% of their budget on programs and services rather than administrative costs or fundraising. 

This shows that the donated money is actually being funneled out to helpful causes, not dispersed internally. Charity Navigator and GuideStar provide easy access to this information.

2. Verify Legitimacy

Unfortunately, there are many scam artists out there who set up fake charities to steal money from well-meaning people. Ensure the charity is registered with appropriate government agencies before donating a dime. 

In the US, use the IRS Tax Exempt Organization Search tool to confirm tax-exempt status. If they’re not on this list, they’re not legit. Also be cautious of organizations with names similar to well-known charities, as this can be a red flag indicating fraud.

3. Assess Transparency

We suggest choosing charities that are open about their operations, finances, and impact. Look for detailed annual reports, clear mission statements, and specific information about programs and outcomes on their websites. 

You should easily be able to find answers to any questions you have, such as where the money goes, who they help, how they operate, and more. Otherwise, run the other way. If an organization is reluctant to share information, consider it a warning sign.

4. Evaluate Program Effectiveness

Look for charities that use evidence-based approaches and regularly evaluate their programs. Organizations like GiveWell specialize in assessing charity effectiveness. Check if the charity publishes impact reports or collaborates with independent evaluators to measure their results. 

Charities that don’t do this are not necessarily illegitimate. However, the best organizations to donate to are the ones that take the time and make the effort to ensure their programs are having the impact they want and their donors want.

5. Check for Third-Party Ratings

You’re not the only one worried about donating to the wrong charity. That’s why there are sites that offer charity organization ratings! Consult charity watchdog organizations like CharityWatch or the BBB Wise Giving Alliance. 

These groups provide ratings based on financial health, governance, and transparency. The ratings are just one tool in your evaluation process. You should still do your own research and verify organizations using the tools mentioned above. 

6. Investigate Leadership and Governance

Research the charity’s leadership team and board of directors. Look for experienced professionals with relevant expertise. A diverse board with a range of skills can indicate trustworthy governance. Organizations made up of ten financial advisors or 20 activists might not be as productive as more versatile teams. 

Charity Navigator often provides information on leadership compensation, which can be a useful benchmark. Proceed with caution when you see fat bonuses and billion-dollar salaries for these CEOs. 

7. Avoid High-Pressure Tactics

Be wary of charities that use aggressive fundraising methods or emotional manipulation. Legitimate organizations should be able to clearly articulate their mission and impact without resorting to pressure tactics. 

They should have thorough answers to all your questions, not guilt-tripping scripts that aim to make people uncomfortable or cornered. Yes, some charities can be intense when addressing donors. But try to recognize the difference between passionate and pushy. You should feel like you’re being informed and educated, not sold to or bullied.

8. Consider Local Impact

If supporting your immediate community is important to you, research local charities. Local community foundations can be excellent resources for identifying reputable organizations addressing specific needs in your area. 

Because these charities are often smaller, more of the proceeds go to the cause, which might make you feel better about your donation. We like to recommend splitting your donations between local organizations and larger charities. 

9. Examine Collaboration and Partnerships

Look for charities that collaborate with other organizations or participate in coalitions. This can indicate a commitment to maximizing impact and avoiding duplication of efforts. Partnerships with respected institutions or government agencies can also be a positive sign. 

Organizations with something to hide usually aren’t willing to open their doors to other charity partnerships and collaborations. In this case, there’s power in numbers, but a partnership doesn’t guarantee the involved charities are trustworthy.

10. Review Donor Privacy Policies

As mentioned, scam artists love to use charities to benefit themselves. Unfortunately, this can sometimes mean taking advantage of donor identities. Be sure to review the charity’s policy on donor information. Reputable organizations should have clear policies about how they use and protect donor data. 

Be cautious of charities that frequently sell or share donor information. The best-case scenario with these organizations is you’ll get a bunch of spam emails and paper mail. The worst-case scenario is your identity and personal data will be compromised. 

Donate With Due Diligence

Few things feel worse than finding out you gave your hard-earned money to greedy manipulators when you thought it was going to those in need. With these tools and tips, you can make more informed decisions about which charities are truly worthy of your support this holiday season. 

Don’t just blindly donate to the first charity you see or the one you recognize. Do your research and due diligence so your donation can make a real difference.

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