3 Ways Not to Pick a Charity for Your Donation

Make Sure You Pick a Charity for the Right Reasons

Metal letters spelling Give on bronze background
••• Steve McAlister/Photographer's Choice/Getty Images

Several years ago, a friend mentioned that she included a special animal sanctuary in her will. I knew that my friend was crazy about animals, and also that she is shrewd when it comes to money.

So I checked out the organization she mentioned, fell in love with it and became a loyal donor.

That is how many of us find the charities we give to...through friends, relatives, the appeal we see on TV, or somewhere in the pile of fundraising letters we get.

My relationship with the animal sanctuary has turned out well, but it could have easily gone bad.

There are lots of things you should not base your charitable giving on, but here are three that you definitely should not do:

Don't Depend on Celebrities

A celebrity-founded charity, or one that they endorse, may or may not be a good investment of your charitable dollars. Even if you are smitten with a celebrity, check out the charities they support or helped start.

Charity Navigator, a well-known evaluator of charities, compiled a list of celebrity-related organizations that were well or badly run. That list is an eye opener.

For instance, Michael J. Fox received four stars (the highest rating) for his Foundation for Parkinson's Research. However, The Children's Health Fund endorsed by Paul Simon only got two stars. A celebrity name may not be much of an endorsement in many cases.

Ignore the glamor and check out those celebrity-related charities before you commit.

It only takes a few minutes to look up a charity at one of the watchdog sites, but it could save you significant regrets later.

Don't Let the Stories Drive Your Actions

Almost all fundraising appeals include stories. Sometimes they break your heart; sometimes they make you smile or laugh. Stories are fantastic, and charities should use them.

The story is meant to get you to open the envelope, click on the email, or write down a phone number.

However, stories should be backed up with facts. Facts about what the charity is doing, facts about its impact, and facts about how it handles its money and your donations. Stop, think, and do some checking before you write that check, click that donate button, or call the phone bank.

Don't Confuse Efficiency with Effectiveness 

The charity watchdogs, such as Charity Navigator and the Better Business Bureau, are extremely helpful, but it is still very tough to evaluate just how effective a charity is. Just because a charity spends most of its income on "programs" says nothing about whether those programs work.

Instead of depending on visible symbols such as efficiency graphs or even charity badges, dig around for more information that shows how an organization is making progress on its particular issue.

This information is often right on a charity's website. Good examples include these pages from Camfed and KaBoom!. Don't hesitate to call the charity to discuss any concerns that you have, especially if you are making a large donation.

Do Keep Up With the Trends in Giving

Check out some newer charity evaluators that do measure the effectiveness of charities with techniques based on performance data as well as their finances.​

Investigate GiveWell and The Life You Can Save, organizations that do the research for you and then recommend charities that meet their stringent standards for effectiveness.

Ever wish picking charities for investment was as easy as picking a mutual fund or ETF? Some funds in the charitable world do work a bit like those investment tools. 

For instance, Bright Funds finds notable charities that work on problems such as the environment, water, education, and poverty.  Donors can choose one or more “baskets” of causes and invest in them through Bright Funds. You will receive lots of information about the impact made on the causes you care about.

GlobalGiving belongs to the world of crowdfunding. There are many crowdfunding sites, but GlobalGiving vets international charities for you. You can donate to GlobalGiving and let it choose where your funds go, or you can respond to specific issues.

In any case, you will become part of the GlobalGiving community and receive updates on the good you are doing in the world.

Another way to piggyback on the research of others might be to follow a particular foundation that you trust. Foundations vet charities extensively before giving them any money. By looking at the list of charities a foundation supports, you can find a trustworthy charity for your personal donation. 

The Bill and Melinda Gates Foundation recently make it easier for donors such as you and me to give to the many charities that it supports. The Foundation makes its list of grantees public on its site so you could pick one or more for your direct donations. Plus, if you cannot make a decision, you can send a check, cash, money order, or wire transfer to the Gates Philanthropy Partners and it will distribute your gift among the Gate Foundation grantees.

Choosing a charity is not easy and should not be a casual act. Investigate using the tools we have today. You would never pick a car or a refrigerator just from watching an ad. Turn your consumer smarts to your charitable donations too