What to Know Before Making Year-End Donations

Checks to organizations eligible for tax-deductible donations mailed before Jan. 1 count for this year even if they are not cashed until 2010.

When making donations to worthy causes, we like to make sure our money is being used in the best manner possible. We’re grateful there are resources such as GreatNonprofits, a website that allows beneficiaries, clients and donors to post positive and negative charity reviews, which are then posted to the organizations’ GuideStar reports. Perla Ni — GreatNonprofits CEO, Stanford Social Innovation Review founder and “philanthropy game-changer” as voted by readers of The Huffington Post — offers some additional tips for choosing the right charity.

Don’t select a charity based on overhead ratios. Choosing a nonprofit based on how much money goes to the beneficiaries is a common mistake, Ni says. The overhead ratio does not actually tell the donor much about the charity’s impact and also may discourage charities from investing in things that would make them more effective. The rules for estimating overhead also are vague, and are interpreted differently by each organization. For more information, we suggest checking charity watchdog sites such charitynavigator.org and givewell.net.

Talk to people who have been directly involved with the charity. If you don’t know anyone who has worked with the organization, log on to GreatNonprofits.org, which has more than 19,000 reviews of more than 2,600 charities. Or, better yet, volunteer so you can gain firsthand experience and get a better understanding of what the charity does.

Check out what the experts are saying on Philanthropedia, which provides advice previously available only to large foundations, says Ni. Donations to an entire cause, such as climate change or education also can be made through Philanthropedia’s Expert Mutual Funds — the money is divvied among top charities in each field.

What resources do you use when selecting a charitable cause?

Photo credit: Biffspandex/iStockphoto

Tags: CEO, Charitable organization, charities, Charity Navigator, Giving, Human Interest, iStockphoto Inc, Perla Ni, Philanthropedia’s Expert Mutual Funds, Philanthropy, Social economy, Social Issues, The Huffington Post