Top 10 Best Practices of Savvy Donors

1. exempt status under section 501(c) (3) of the Internal Revenue Code. All of the charities evaluated by Charity Navigator meet this basic requirement.
    
2. Check The Charity's Commitment To Accountability & Transparency
   In 2011, Charity Navigator added an Accountability & Transparency dimension to its rating system. It tracks metrics such as whether the charity used an objective process to determine their CEO’s salary, whether it has an effective governance structure, and whether it has a whistleblower policy. This data is critical because charities that follow good governance and transparency practices are less likely to engage in unethical or irresponsible activities. So, the risk that such charities would misuse donations is lower than for charities that don't adopt such practices.
    
3. Obtain Copies Of Its 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.
    
4. Review Executive Compensation
   Sophisticated donors realize that charities need to pay their top leaders a competitive salary in order to attract and retain the kind of talent needed to run a multi-million dollar organization and produce results. But they also don't just take the CEO's compensation at face value; they benchmark it against similar-sized organizations engaged in similar work and located in the same region of the country. To help you make your own decision, Charity Navigator's analysis reveals that the average CEO's compensation of the charities we evaluate is almost $150,000. In general, salaries tend to be higher in the northeast and at arts and education charities. Sophisticated donors also put the CEO's salary into context by examining the overall performance of the organization. They know it is better to contribute to a charity with a well-paid CEO that is meeting its goals than to support a charity with an underpaid CEO that fails to deliver on its promises. (Check out our CEO Compensation Study for more benchmarking data.)
    
5. Start A Dialogue To Investigate Its Programmatic Results
   Although it takes some effort on their part to assess a charity's programmatic impact, donors who are committed to advancing real change believe that it is worth their time. Before they make a contribution, they talk with the charity to learn about its accomplishments, goals and challenges. These donors are prepared to walk away from any charity that is unable or unwilling to participate in this type of conversation.
    
6. Concentrate Your Giving
   When it comes to financial investments, diversification is the key to reducing risk. The opposite is true for philanthropic investments. If you've really taken the time to identify a well-run charity that is engaged in a cause that you are passionate about, you should then feel confident in giving it a donation. Spreading your money among multiple organizations not only results in your mail box filling up with more appeals, it also diminishes the possibility of any of those groups bringing about substantive change as each charity is wasting part of your gift on processing expenses for that gift.
    
7. Share Your Intentions And Make A Long-Term Commitment
   Smart donors support their favorite charities for the long haul. They see themselves as a partner in the charity's efforts to bring about change. They know that only with long-term, committed supporters can a charity be successful. And they don't hesitate to tell the charity of their giving plans so that the organization knows it can rely on the donor and the charity doesn't have to waste resources and harass the donor by sending numerous solicitations.

Online Giving Statistics

Online Giving Statistics

The Digital Giving Index
The Digital Giving Index, produced annually by Network for Good, looks to charity websites, charity portals, and social giving (peer-to-peer) websites to analyze online giving trends. The 2014 Index Good examined the $233 million in online donations to 45,000 nonprofits that was processed entirely by Network for Good.
Highlights include:  

• Overall giving rose 3% from prior year.
• 3% of annual giving occurred in the month of December. 
• 12% of annual giving occurs on the last 3 days of the year.
• Donations made on "Giving Tuesday" rose 148% from 2013.

M+R Benchmark Study
The M+R 2015 Benchmark Study provides data regarding online fundraising, advocacy, and list building. This year, the M+R Benchmark Study analyzed the data of 84 nonprofits, producing a wide-ranging assortment of online nonprofit metrics.
Highlights include:  

• Online giving increased 13% from the year prior.
• Website traffic for nonprofit websites rose 11% from the year prior.
• Monthly online giving grew 32% from the previous year.
• One time online giving grew 9% from the previous year.

The Blackbaud Index of Online Giving
Blackbaud's index covers the online giving trends of over 3,786 nonprofit organizations representing $2 billion in yearly online giving. The Index is based on actual revenue statistics from nonprofit organizations of all sizes and a variety of missions. 
More reports, such as how online varies by the size of the charity and by the mission of the charity, can be found on the Blackbaud site here.

Giving Statistics

Giving Statistics

Few people realize how large charities have become, how many vital services they provide, and how much funding flows through them each year. Without charities and non-profits, America would simply not be able to operate. Their operations are so big that during 2014, total giving was more than $358 billion.

How big is the sector?

• Total giving to charitable organizations was $358.38 billion in 2014 (about 2% of GDP). This is an increase of 7.1% in current dollars and 5.4% in inflation-adjusted dollars from 2013.
• This is the fifth straight year that giving has increased and the first year to surpass the previous high-water mark of $355.17 billion seen in 2007.
   

Where are donations coming from?

• Giving increased in every category of giver (foundation, corporation, bequest and individual). 
• As in previous years, the majority of that giving came from individuals. Specifically, individuals gave roughly $258.5 billion (72%) representing a 5.7% increase over 2013 (4% when adjusted for inflation).  
• Giving by bequest was up 15.5% in current dollars (or 13.6% when adjusted for inflation) to $28.1 billion. Taken together, 
• Foundations gave $54 billion which represented an increase of 8.2% (or 6.5% when adjusted for inflation).
• Corporations donated $17.8 billion for an increase of 13.7% (or 11.9% when adjusted for inflation).
• Historically, as we saw in 2014, donations from individuals account for roughly 75% of all donations. If you add in gifts from bequests and family foundations, which are essentially gifts from individuals, then the category accounts for nearly 90% of all giving. In other words, the donating public, not big foundations or corporations, is responsible for the vast majority of annual donations.

Where do the donations go?

• Giving to Education charities was up 4.9% (3.2% inflation-adjusted) to $54.6 billion.
• Donations to Human Services charities were up 3.6% (1.9% inflation-adjusted) to $42.1 billion.
• Foundations saw an increase of 1.8% (0.1% inflation-adjusted) to $41.5 billion.
• Health charities experienced an increase of 5.5% (3.8% inflation-adjusted) to $30.4 billion.
• Charities that focus on the Environment / Animals saw an increase of 7% (5.3% inflation-adjusted) to $10.5 billion.
• Public-Society Benefit charities saw an increase of 5.1% (3.4% inflation-adjusted) to $26.3 billion.
• Arts, Culture and Humanities saw an increase of 9.2% (7.4% inflation-adjusted) to $17.2 billion.
• Giving to International charities declined due to fewer overseas disasters. Specifically, gifts to International charities were down 2% (3.6% inflation-adjusted), to $15.1 billion.
• Historically, Religious groups have received the largest share of charitable donations. While this was still true in 2014, this was the first year since 2009 that it didn't decline or remain flat.  With the 2.5% increase (0.9% inflation-adjusted) in donations this year, 32% of all donations ($114.9 billion) went to Religious organizations. Much of these contributions can be attributed to people giving to their local place of worship. 
• The next largest sector was Education with 15% of all donations.

All data is the property of Giving USA 2015, the Annual Report on Philanthropy. 

Guide To Giving In The Workplace

Each year, billions of dollars are donated to America's charities through workplace giving campaigns. Workplace giving is an easy and efficient way to make tax-deductible donations to charities through payroll contributions. Together with your company, you can work to benefit your community by providing a much-needed stream of revenue to charities.  Chances are that if you work at a corporation or for the federal government, you've had the opportunity to participate in one of these programs.

While workplace giving was designed to improve America's charities' efficiencies, benefits exist for both the employee and participating charity. For the employee, these programs offer the convenience of automatic payroll deductions without losing the tax benefits of charitable giving. Since employers often match employee contributions, workplace giving provides the employee with the opportunity to directly influence their company's philanthropic endeavors. For the charity, even a small pledge from an employee makes an impact when it is increased by the employer's matching funds.

Charity Navigator, America's largest evaluator of charities, offers the following 6 tips as a guide for employees who donate through workplace giving programs.

1. Examine your values to determine which causes you want to support. 
Workplace giving campaigns are user-friendly in part because they offer lots of choices. Employees have the option to contribute to all the participating charities or to designate their donation to specific charities. Therefore, before you participate in your employer's workplace giving campaign, you'll need to reflect on the issues you feel are most crucial. Whether you're concerned about the environment and believe the ocean needs to be cleaned up, or worried about the well-being of individuals in your community and want to support a local food bank, you should have plenty of choices that reflect your personal beliefs and values. 

2. Review your personal finances to determine how much you can afford to give.
Once you've honed in on your charitable interests, you'll need to review your personal finances and set some giving goals. In general, it is estimated that average annual giving is 3.2% of income. Apply this percentage to your annual income and see if you are comfortable with that level of giving. Even better, break it down per pay period so you'll know exactly how much will be deducted from each paycheck. You might be surprised to find out you can afford to give more than you thought.

After you've calculated how much to contribute, you'll need to remember a few rules in order to maximize the tax benefits of your gift. Payroll deduction is convenient in that you do not need an acknowledgement from the charity to claim your tax deduction. There is however one exception to this rule. If you contribute $250 or more from a single paycheck, then you must prove to the IRS that you (a) made the donation and (b) you didn't receive anything in return for that donation. Simply keeping a copy of your pay stub fulfills the first requirement. To comply with the second, you'll need a pledge card or other documentation from the charity specifically stating that you did not receive any goods or services in return for your gift. If you need some help to determine the level of giving right for you based on the tax benefits of giving, access Charity Navigator's giving calculator.

3. Learn how the participating charities were pre-screened and back it up with your own research. 
Not all workplace giving campaigns use the same criteria for selecting charities. Some simply compile a list of all the charities providing services to your community. Others restrict eligibility to those charities that have met general financial standards. Still others limit participation based on the charities' missions.

Thus, the charities provided to you may not necessarily meet your giving standards. It is up to you to conduct a review of each charity's programmatic and financial accomplishments. Start your research by using Charity Navigator's website to quickly review the Financial Health and Accountability & Transparency of thousands of America's largest charities. Look for those charities that are efficient fundraisers, spend a high percentage of their budget on programs, are steadily growing their revenue and programs over time, and have enough liquid assets on hand to survive a crisis. It is also important to note if a charity is willing to share critical data about their organization-- by making full and accurate information about its mission, activities, finance, and governance publicly available, a charity encourages transparency and accountability to its constituents. Then, either explore the charity's website or give them a call to learn more about the organization's mission, goals and accomplishments. Good charities will be eager to share their successes with you.

4. Find out what percentage of your donation is going to the charities you've chosen.
Just as individual charities exhibit different levels of efficiency, so do the fundraising charities that run workplace giving campaigns. Since these organizations exist to channel your money to other charities, they should spend more on programs and less on overhead as compared to other types of charities. In fact, Charity Navigator's analysis shows that the median fundraising charity spends 84% on its programs and only 7% on administrative expenses. Comparatively the median charity evaluated by Charity Navigator spends 82% on programming and 9% on administrative expenses. So before you contribute, make sure that your workplace giving campaign is efficient at funneling donations to the charities it is in business to support.

5. Maximize the amount of money going to charity by reviewing your employer's matching program. 
Many employers will match charitable donations made by their employees throughout the year. Often employers extend these matching programs to include gifts made through workplace giving campaigns. It is important for you to inquire about your employer's matching criteria so that you can maximize the impact of your donation. For example, some employers double the impact of a donation by matching each dollar. That means if you can only afford to give $500, the charity actually receives $1,000. Once you understand your employer's matching plan, you can make the most of your workplace giving campaign and maximize the level of funding your favorite charities receive.

6. At the end of the year, find out how your donations were put to use. 
You've taken the time to identify a well-managed, responsible charity that works to solve the issues that are most important to you. Over the course of the year you've invested your hard-earned money to support that charity's mission. Now it's time to take stock of that charity's accomplishments. Find out what successes the charity had during the year by reviewing the charity's website, reading its annual report or directly communicating with the charity. Be sure to also inquire as to what challenges the charity expects to face over the coming year.

After you're satisfied with your favorite charity's progress, be sure to continue your commitment to its work. Renew your financial support through your employer's annual workplace giving campaign, making sure your contribution qualifies for your employer's matching program. As you learn more about how your donation advances the charity's mission, you might even be motivated to increase your involvement in the cause by donating your time. Charities play a vital role in our communities and they need both financial donors and volunteers to help them succeed in making our country a better place to live.

Attention Human Resource Managers and other Workplace Giving Volunteers
Charity Navigator is pleased to provide the following formatted version of this article suitable for you to quickly download and share with your employees. Publishing our guide will help you maximize the level of participation in your annual workplace giving campaign. It demonstrates your company's commitment to responsible philanthropy.
6 Tips to for Workplace Giving (pdf)

Guide To Volunteering

Guide To Volunteering

With many charities reporting that they use volunteers,it is hard to imagine where the philanthropic community would be today if it wasn't for the help of these altruistic individuals. Volunteers perform a variety of free tasks for charities that are too under-funded and under-staffed. A volunteer might stuff envelopes, feed animals, tutor children, build housing, serve as a museum docent, counsel those in crisis, sell tickets or just answer the phone. At the highest levels, volunteers serve on the board of directors, and are charged with the crucial task of governing the organization.

Just how generous are Americans with their time? According to a recent government study,  62.6 million Americans ( 25.4 percent of the adult population) volunteered in 2013 providing 7.7 billion hours of service valued at $173 billion. The study found that the average number of hours Americans volunteered was 32.1 (a decline from a high of 38 in 2004). It is nearly impossible to quantify the financial value of all these volunteers. Many tasks completed by volunteers do not have counterparts in the for-profit sector by which we can measure their value. These calculations become even more complex if you try to incorporate the costs of benefits that the charity would incur by hiring a full-time employee to cover the work of volunteers. To simplify things, many charities use the industry standard of $23.07 per hour (for 2014) to calculate the monetary value of their volunteers (the 2013 value was $22.55 per hour). Thus the median American, who volunteered 32.1 hours in 2013, gave approximately $724 to charity.

Perhaps you are among those that generously gave of their time to help make this world a better place. If so, did you research your volunteer decision to the same extent that you scrutinize your charitable giving decisions? I doubt you'd feel confident sending a charity a check for a thousand dollars without doing some investigating into the charity's endeavors first. So shouldn't you also conduct some research before you donate your time? Wouldn't you be troubled to learn that you donated nearly 33 hours of your time to an organization that went bankrupt, as opposed to another charity that was pursuing the same mission and had enough cash flow to sustain its work well into the future? A well-informed volunteer is not only more likely to make a commitment to charity, but also more apt to make a significant impact on that organization's work.

Identify charities that match your charitable interests
Similar to making a giving decision, you should begin your research by determining what it is you want to accomplish and identifying charities that work to achieve those goals. Use our site to create a list of charities that match your interests and are located near your home.

Examine their financial health
Maybe you feel most comfortable donating your time to a charity that is fiscally efficient. Or maybe you see an opportunity to help a charity whose revenue hasn't grown as quickly as the need for its programs and thus could really use an infusion of volunteer assistance until it can hire more staff. Either way, Charity Navigator's ratings will provide the insight you need.

Evaluate their programs
Once you are satisfied with the organization's finances, invest some time exploring the charity's programmatic successes. Weed out those that can't clearly communicate their mission, goals, accomplishments and challenges. Continue to examine their work until you are left with a list of exceptional charities for whom you'd be proud to work.

Quantify and qualify what you can offer
Finally, contact your list of potential charities to asses their volunteer needs and determine if your skills match those needs. With many charities having paid volunteer coordinators, don't be surprised if you are asked to stop in for an interview. You may even be required to undergo extensive training once you are accepted into their program. Thus it is a good idea to conduct a self-assessment to ascertain your personal goals before you run off to meet with the charity. Be sure you can answer the following questions:

• How much time can I realistically give in a week, month or year?
• What days of the week and time of day am I available to volunteer?
• What unique talents do I possess that would help this charity achieve its mission?
• What tasks am I unable or not willing to do?
• What do I hope to gain from the experience?
  • Do I want to develop a new skill set that would be transferable to the workplace?
  • Do I want to meet new people with similar interests?
  • Do I just want the gratifying feeling of helping?

Make a commitment
Once you identify a charity worthy of your time and are offered a volunteer position, it is important that you make a personal commitment to be there for that organization. Volunteers that show up late, cancel at the last minute and produce limited results encumber the charity, costing it money and preventing it from fulfilling its mission. A reliable volunteer with a strong work ethic can go a long way towards helping a charity meet its goals. Remember the organization has made an investment in you and is depending on you to produce a return.

Guide to Donating Noncash Items

Guide to Donating Noncash Items

At Charity Navigator we receive questions every day from generous donors looking to donate noncash items to a worthy cause. Below are the steps we recommend taking in order to maximize the impact of your noncash contribution.

Step 1: Determine whether or not the items you wish to donate are useful.
Most charities can only make use of items that are new, unused, or nearly new. If you don't have any use for your old, tattered couch, rusty washing machine, or other used item, chances are neither will a charity. Similarly, a timeshare that has turned out to be a bad investment for you won't do much to help out a worthy charity. If you think that the items you wish to donate may be of use to someone else proceed to Step 2.

Step 2: Consider selling your items and donating the proceeds to charity.By donating cash instead of goods you allow charities greater flexibility in spending the money so that it reaches the people or animals that need it the most. When you sell the items yourself you also eliminate the for-profit middleman that can take a big cut of the money intended for charity. When you sell the items yourself you also unburden charities of any time and money they would have to spend on selling or refurbishing the items, allowing them to spend more resources directly fulfilling their missions. Finally, by selling the items yourself, you know the exact value of the donation you can report to the IRS and don't have to worry about estimating the amount for your tax returns.

Online auction sites such as eBay or classified ads such as craigslist are good places to sell your new and used items. You could also get your friends and neighbors together for a multi-family garage sale, and donate the proceeds to a local charity. Whether or not you decide to sell your items and donate the cash, or you still think your items may be of use to a charity in need, proceed to Step 3 to find the right charity to accept your generous support.

Step 3: Start locally to find the right charity.
In order to avoid transportation costs that can lower the impact of your donation, look first in your local community to find a charity to support with your noncash contribution. Call around and ask charities if they accept the kind of items you are looking to donate, and if they don't find out if they have any suggestions of a charity that does.

You can use Charity Navigator's database to find a charity in your local area that might be interested in donated goods by using our advanced search feature and searching for charities within your state, city, or within a set radius from your zip code. Within the results list you can also click on "Re-sort by: Overall Rating" to see these charities listed from highest to lowest rated. Once you see a few efficient charities that you think may be interested in your donated goods you can use the contact information provided on their ratings page to discuss with them how you might be able to arrange such an donation.

Guide To Donating Your Car

At Charity Navigator, our primary purpose is helping America's donors make informed giving decisions when they part with their hard-earned dollars by writing a check to charity. In recent years, however, more and more donors are attempting to help themselves, and help others, by donating their used automobiles to charity. This has become a massive business. In the year 2000, nearly ¾'s of a million people took a car donation deduction on their federal tax returns, thusly lowering their taxes by over $650 million.

As America's car donation system is currently construed, it is easy for donors to benefit greatly by donating their cars, albeit with a little risk. By following these 10 Charity Navigator Tips For Charitable Auto Donations, you can minimize that risk, and maximize the amount that actually gets to charity.

1. Find a Charity That Directly Accepts Car Donations
If at all possible, avoid the for-profit intermediary organizations that advertise so pervasively to handle your car donations. When you work with one of these organizations, they keep the vast majority of the dollars created from your donation. Even the most reputable of the agencies that handle these transactions keep nearly 50% of the car's value for their troubles (other, less scrupulous entities keep 90%, or even more). If you can find a charity that handles the transaction themselves, they can keep 100% of their profits. It's possible that the charities you already support have a car-donation program that you don't know about. Check with them first.

2. If Your Charity Doesn't Accept Cars, Take the Time to Find a Charity That Does, and Still Does Work You Respect
Remember that you're still making a charitable donation, and don't simply give your automobile away to any charity, just because they're a charity. Do a little research, and find a high-performing charity that does the kind of work you like, in the region you wish to target, and does that work well.

3. If It Runs, Drive the Car to the Charity
Worthy charities are going to have to pay someone else to handle a pick-up or a tow. This is yet another cost that cuts into the amount that gets to that organization's programs. If you can get the car to them yourself, do it.

4. If You Have to Use a Intermediary Agency, Research the Percentage that Gets to Charity
The IRS does not require the car donation agencies to contribute a set amount of the auto's proceeds to the intended charities; that amount is negotiated between the charities and the handlers. Try to find an agency that maximizes that amount, and call the charity to confirm that number before you give. The charities are reluctant to criticize the middlemen, because they don't want to lose the dollars they do receive, but state attorney generals are beginning to investigate and even prosecute these for-profit middlemen, for holding themselves out as charities and misleading the public on the amount that is actually reaching charitable causes.

5. Make Sure Your Intended Organization is a 501 (c) (3)
While many organizations can claim non-profit status, donations to 501 (c) (4) organizations are generally not tax-deductible. These are political organizations with permission to lobby our government; like Disabled American Veterans or the National Rifle Association. Make sure your intended recipient has 501 (c) (3) public charity status.

6. Transfer the Car Correctly to the Charity
Some charities will ask you to leave the assignment of ownership space on the charity donation papers blank, so they don't have to re-title the auto. If your charity asks this of you, find another charity. If you don't formally sign your car over to the designated nonprofit, you will be held responsible for any parking tickets that are subsequently incurred, or liable if it's used in a crime. Remember, the charity you give the car to will probably not use your car to deliver meals to the needy, but will simply sell it as quickly as possible. When someone buys it from them at auction and doesn't bother to register that car, it's still yours in the eyes of the law.

7. Value Your Car Correctly
With to the proliferation of car donations, the IRS became increasingly concerned about how taxpayers valued the vehicles they donated to charity. Not only did the agency increase heir audits in this area, but it also advocated for changes to the laws that govern such deductions.  It succeeded with the passage of the American Jobs Creation Act of 2004 which prevented taxpayers from simply deducting the published fair market value of vehicles worth more than $500. Instead, the deduction is determined once a car is sold and the charity sends the donor a receipt indicating the exact amount the car garnered at auction.

8. Complete Your Paperwork
Non-cash donations are the most common triggers of audits, so it is imortant to keep thorough documentation of a car donation. Specifically, if your car is valued over $250, then you need to obtain and retain a written acknowledgement from the charity. Additionally, if your car is worth more than $500, you must complete section A of the IRS Form 8283 and attach it to your yearly taxes. Furthermore, if your car is worth over $5,000, then you must have an independent approaisal and fill out section B of IRS Form 8283.

9. Use Fair Market Value (FMV) for the Car
There are several exceptions which allow you to use the Kelley Blue Book or a NADA guide, but you must use the FMV, not simply the highest value listed for the year and make of your car. Use the FMV when:

• instead of selling the vehicle, the charity keeps and uses it,
• the charity makes improvements to the car before selling it,
• your car is sold at a discounted price to a person with a low income,
• or if the car is worth less than $500.

Otherwise, you can only deduct the amount that the charity sells the car for at auction as indicated on the written receipt the charity sends you.

10. Take the Time to Get It Right
It is true that the biggest winner in the car donation game is usually the donor, and not the charity recipient. But if you take your time, ignore the quick and easy television appeals, and find a reputable, high-performing charity that will make the most of your donation, we can all emerge victorious.