In the aftermath of a year that has shown the world the very best and, at times, the worst face of philanthropy, our country is more aware than ever of financial abuse, misuse and fraud on the part of charities and nonprofit organizations. Many people are more reluctant than ever to donate time, talent and treasure to the many nonprofit organizations that truly need and deserve help. It becomes increasingly difficult for donors and volunteers to decide which organizations deserve their support and which ones will use their gifts wisely.

How does the thoughtful donor select from among the many charities that ask for money? How does one decide which organizations deserve and need their money and their time? By what criteria can a person judge if their money is being used wisely?

A good rule of thumb to follow, when evaluating a charitable request, is to follow the Donor Bill of Rights included in this supplement. The Association of Fundraising Professionals (AFP), formerly known as the National Society of Fund Raising Executives (NSFRE); the Council for the Advancement and Support of Education (CASE); the Association for Healthcare Philanthropy (AHP); the American Association of Fund Raising Counsel (AAFRC), and others formulated this document; and numerous other associations representing the nonprofit sector have adopted it. Some key points that can help donors make educated decisions about philanthropic giving are:

Mission
Does the organization have a clear mission statement that is articulated to the public? Is this mission one that the donor supports? Is it clear what this organization does? Many organizations have similar names and some, unfortunately, purposely choose a name similar to a well-established, reputable charity in order to defraud the public. The wise donor understands who the organization is and what it does before getting out their checkbook.

Leadership
The donor has a right to be informed about the people who provide leadership and governance of the organization. Is the Board of Directors comprised of community leaders that are known and respected? Is the Board qualified to govern the organization and assure that it fulfills its mission? Do the members of the Board have term limits, and how long have they served on the Board? Who are the leaders of the organization; do they have the credentials required in the field in which they operate? The donor should look for a list of the Board and executive staff on the letterhead or other written materials of the organizations. Many donors also feel more comfortable knowing that the Board has made a financial commitment to the organization and will ask to see copies of the annual report to see if the Board members are listed as donors.

Financial Information
In Pennsylvania, most nonprofits are required to register with the PA Bureau of Charitable Organizations before they can raise money from Pennsylvania citizens. This rule is true regardless of where the charity is based, so solicitations from all organizations that are required to register must contain the following disclaimer, The official registration and financial information of (XYZ charity) may be obtained from the Pennsylvania department of state by calling toll free, within PA, 1-800-732-0999. Registration does not imply endorsement. If you have concerns about a registered charity, contact the PA Bureau of Charitable Organizations and ask for the financial reports. Most 990 forms (the tax return required to be completed by most nonprofit organizations) are available on the Internet through the Guidestar website—www.guidestar.org. The 990 forms will list income and expenses of the charity including fundraising expenses. Telephone solicitors calling residents of Pennsylvania are required to be registered as professional solicitors and are required by law to tell the donor whether they are volunteers or paid solicitors. If asked, they are also required to disclose what percentage of the money raised actually goes to the charity and what percentage goes to the paid solicitors. Some telephone fundraising firms work on a flat fee basis, which is the ethical way of being compensated, according to the Association of Fundraising Professionals.

Acknowledgment & Recognition
The Donor Bill of Rights also states that donors are entitled to proper acknowledgment and recognition for gifts to charities and that they have a right to remain anonymous if they choose to do so. Donors can have their name removed from any lists that the charity may sell or give to another organizations. Charities are also required by the IRS to tell the donor the Fair Market Value of any substantial goods or services received in exchange for a donation. For instance, purchases at charity auction are not tax deductible because the donor has received goods equal to the value of their “contribution” to the charity.

How does one decide with which charities to share their Time, Talent and Treasure?

First of all, be informed—follow news stories about local and national charities, ask the organization’s leadership to provide information about the charity before making gift. Read the materials the organization publishes, such as annual reports, brochures, website, etc. Talk to Board members of the organization. Talk to others who donate to this organization. If there are doubts about the legitimacy of a charity, call the PA Bureau of Charitable Organizations or check their website to see if the charity is registered with the Bureau. Ask if the person soliciting you is a volunteer or paid solicitor. Fundraisers who are members of AFP also subscribe to a code of ethics that, among other things, prohibits them from receiving a percentage-based compensation.

Test the organization—Many people give small gifts to an organization first and track how the organization acknowledges and recognizes their gift before making a more substantial gift. Getting involved as a volunteer, sharing talents and time, before making a gift, is also a good way to discover if the organization is one for which the donor feels a real passion.

Focus on the positive aspects of philanthropy—a gift to charity can make a real difference in the life of a child, a family, or a community. There is nothing like making a charitable gift to a deserving organization to make a person feel good. In fact, Doug Lawson, in his book, Give to Live, says it is a proven fact that philanthropists live longer and are happier. Give, but give wisely.
This article is not meant to provide tax or legal advice; please consult your tax advisor before making a charitable gift.

Linda Lysakowski, ACFRE, is President/CEO of CAPITAL VENTURE, a full service fundraising consulting firm specializing in capital campaigns, planning studies and development audits and plans. CAPITAL VENTURE has offices in Reading, Lehigh Valley, Schuylkill County, Philadelphia and Las Vegas, NV.