Friday, July 19, 2013

Intelligent Giving Friday Tip: Obtain Copies of a Charities Financial Records

Savvy donors know that the financial health of a charity is a strong indicator of the charity's programmatic performance. They know that in most cause areas, the most efficient charities spend 75% or more of their budget on their programs and services and less than 25% on fundraising and administrative fees. However, they also understand that mid-to-large sized charities do require a strong infrastructure therefore a claim of zero fundraising and/or administrative fees is unlikely at best. They understand that a charity's ability to sustain its programs over time is just as important as its short-term day-to-day spending practices. Therefore, savvy donors also seek out charities that are able to grow their revenue at least at the rate of inflation, that continue to invest in their programs and that have some money saved for a rainy day. All of this analysis is provided on Charity Navigator's website for free, but when considering groups not found here, savvy donors ask the charity for copies of its three most recent Forms 990. Not only can the donor examine the charity's finances, but the charity's willingness to send the documents is a good way to assess its commitment to transparency.

I wish you all a great weekend. Stay cool!

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