If you want your donation to send a CEO and his family on a luxurious vacation, that's great. But if you want it to find a cure for cancer, it is best to do some research before writing a check.
Most people are generous by nature, and when they watch news stories about natural disasters or see photos of children with life-threatening illnesses, it's easy to give impulsively. But four cancer charities found by the FTC to have misused $187 million in donations provide a useful lesson in why any donation should be done with care and caution. According to Kiplinger's article, "How to Check Out a Charity Before You Donate," organizers at the Cancer Fund of America, Cancer Support Services, Children's Cancer Fund of America and The Breast Cancer Society blatantly stole millions from well-meaning donors.
Here are some tips for making sure that your donation does what you intend it to:
Hang up on telemarketers. The charities charged with fraud by the FTC used telemarketing calls, direct mail, and websites to ask for donations. A call from someone soliciting a donation puts you on the spot. You might feel pressured to make a donation, but don't rush to say yes. Decline any requests to give over the phone. Telemarketing companies that are enlisted to solicit donations on behalf of charitable organizations usually retain a significant portion of the funds that they raise. Eliminate the middleman and contact the charity directly to make a donation.
Don't wait for charities to come to you. Eliminate the pressure to give to an organization that contacts you and decide which causes are important to you. Identify charities that are addressing those causes. Create a giving plan to avoid making spur-of-the-moment donations.
Do your research prior to giving. Just because an organization says it is doing good work doesn't mean it actually is. You should find out what you can about how an organization will use your money before you make a donation by checking third-party evaluations and ratings sites like the Better Business Bureau's Wise Giving Alliance, Charity Navigator, and Charity Watch. These sites look at charities' finances, governance, and effectiveness. Be concerned if an organization is spending more than 25% on overhead.
Write a check or use a credit card for your donation. A legitimate not-for-profit will not accept cash because this method runs contrary to fundraising best practices. You'll also need to ask for a receipt that includes information about how much of the donation is deemed tax-deductable by the IRS. Getting you this information will not be a problem for any properly run organization.
Reference: Kiplinger's (June 2016) "How to Check Out a Charity Before You Donate"