It seems as though a lot of instances of fraudulent and deceiving Veteran charities are coming to light and we just want to help you make informed decisions. Below you will find a few different areas that you should look into before donating to an organization in order to ensure the legitimacy and trustworthiness of any charity.
#1 Local Hands, Local Dollars, Local Stories
Keeping your dollars local is always a good thing – support your community! By staying local with your donations you have the luxury of being able to know the organization personally. Visit their office and take some mental notes: Is it a building full of closed doors? Are there clients present? Do they display what they do? Meet the people that work there: Are they friendly and helpful? Do they seem enthusiastic about their cause? And ask about their local impact: What have they done for the community? How many people have they helped? And compare that to how long they’ve been in business.
With local organizations you can get a feel for what they do and how they do it but you should still dig a little deeper and see how they work internally. Also, what if you want to give to an organization that isn’t local? It’s time to take a peek at their financials.
#2 On the Dollar Percentage
One of the first things you want to find out is how much of the donated dollar is being put towards their programs or charitable purposes. 60% is decent (60 cents on the dollar) but most efficient charities can allocate 75% or more towards their programs (75 cents on the dollar).
But how do you find out? There’s two ways, you can call and ask or most organizations have it posted somewhere on their site, or you can take a look for yourself by investigating their 990. You will want to look at Page 10, Line 25, Column B “Total Program Service Expenses” and divide it by Page 10, Line 25, Column A “Total Expenses” then multiply by 100. This figure will give you an idea of the on the dollar percentage.
Click here for an example using our own 2011 990.
#3 Overhead Percentage
Another way to determine a charity’s legitimacy is to figure their overhead by looking at their 990; it should be accessible to the public. Overhead refers to ratio of revenue to various costs. This number should typically be 25% or less, usually less.
To compute, find or request the organization’s 990 and look at Page 1 and Page 10. The formula looks like this:
(Part I, Line 18 “Total Expenses”) – (Part I, Line 13 “Grants Paid”) – (Part I, Line 14 “Benefits to or for _______Members”) – (Part IX, Line 25, Column B “Total Program Service Expenses”)________
Part I, Line 12 “Total Revenue”
Click here to see an example using our own 2011 990.
Overall, we want you to be able to choose with confidence a charity that will put your donations to work and we used our own information to show you that it can be done – there are hardworking charities out there. We hope you use this information every time you are considering donating. These are simple tasks that can provide you with the data needed to decide if a charity is using your donations wisely as well as a great insight on where an organization’s mission is coming from: their wallet or their heart?
For more information on this topic or to see lists of rated charities feel free to visit any of these sites:
(link presence does not imply endorsement)