Philanthropic giving is a source of joy to many people. However, nothing sours that joy quite like learning that your contribution is not being used as promised. With so many charities to choose from, it’s important to identify the nonprofits that will use your money efficiently and for a truly good cause so that you don’t risk your charitable donation falling into the hands of those who would misuse it.

If the Haiti Red Cross exposé taught us anything, it’s that you need to perform due diligence to ensure that the charity you choose to support is trustworthy and honest. The guidelines below provide learning on how to properly vet nonprofits before giving.

About Their Financial Records

Regardless of the marketing message published by the charity, you can find out accurate information about the charity’s spending habits by reviewing their financial records. The best records to review are the charity’s annual report, their IRS Form 990, and any audited financial statements. Many charities have this information readily available on their website or can send it to you upon request.

The IRS Form 990 is significant in two ways. First, it provides information on the salaries of the charity’s executives, which allows you to assess how the nonprofit is using their contributions. Second, the form outlines the nonprofit’s program costs and expenses, which will bring to light how efficiently the charity uses donations.

Consult Watchdogs

There are several organizations that exist to aid donors in evaluating charities, exposing corrupt practices and informing the public of each nonprofit’s merit. Here are a few useful sites to explore:

• CharityWatch: The website for the American Institute of Philanthropy, CharityWatch provides useful metrics and a list of charities rated from best to worst.
• ProPublica: This investigative journalism organization is a great source for finding financial data and other charity records.
• GuideStar: This nonprofit database allows you to read reviews on charities and purchase detailed financial reports that include salary and Form 990 data.
• Charity Navigator:  An excellent resource for charitable donors, Charity Navigator provides many different top ten lists and tips to help you make the most of your donation.

Donors Beware: Be Wary of Copy Cats and Misleading Names

A common tactic among scam artists is to create an organization with a name that closely resembles that of a well-known charity. For example, the scammers might try to drum up donations for “Kid Wish USA” and draw parallels in their messaging to the Make a Wish Foundation.

The wording in the organization’s title is important too. Some groups that use the word “Foundation” in their title may not be a nonprofit at all. The IRS documentation can serve as a sanity check to verify that the organization you choose to support is, in fact, a charity.

Ensure that your donation goes to those who truly need it by doing some homework. See other life topics on bespoke services and products, high-net-worth learning communities and philanthropy on bravas.com.