For those of you new to Free Money Finance, I post on The Bible and Money every Sunday. Here's why.
The Wall Street Journal suggests you check out how your church is using its funds (if you are concerned about it) and I agree. You should be able to find out how your church is using the money you contribute. And if you don't get a good answer (or if you decide you can't trust them in handling money), then I would suggest you leave the church for a place you can trust.
Of course, there are a few different thoughts on how much you should monitor your giving (whether to a church or other organization). Generally these boil down to the following:
- I am a steward of what God gives me and as a result I am responsible for how the dollars I give are spent. Therefore I want to know EXACTLY how my money is spent.
- Yes, I am a steward, but I am giving my gift to a trusted organization and while I generally know how they spend the money, I do not know where every penny goes.
- I give and trust God will use the money for His purposes. I don't have much of a knowledge where the money goes.
Personally, I try to be in the second point's range with all my giving. For instance, our church has an annual business meeting where they present the financial results for the previous year (audited, by the way) and questions are asked. I don't know where every penny goes (nor do I want to), but I have a good sense of how the overall spending breaks down. I'm fine with that.
I also have a couple organizations I work with either as a board member, advisor, or committee member. I know a good amount about their operations and am comfortable with their spending (and my giving) as a result.
On the other hand, there are national groups that I really don't know many details about -- I just have a general sense of what they do. For instance, I know that Habitat for Humanity builds homes for those who need/can't afford them, but that's the end of my knowledge. But I still give to them because they are (in my eyes) a trusted source of charitable work and have been rated such by impartial organizations.
So I try to get as much information as I can about an organization and then base my give/no give decision accordingly, depending on what I know and what sort of charitable efforts I want to support at the time.
How about you? How much do you need to know before you give to a charity?
Thanks for sharing the information. We should be careful while donating. You have mentioned very good points to check whether it is a fake one or real one. I do agree with you before donating money we should check spending of charity. I donate money Jason Halek . I deeply researched them& found they are good & use money for children’s welfare. Enjoy the joy of giving.
Posted by: denicelorraine | May 27, 2012 at 07:53 AM
Sometimes instructive to check out org's form 990.
Numerous websites, but one example:
http://foundationcenter.org/findfunders/990finder/
Posted by: M | May 27, 2012 at 10:04 AM
FMF, I'm with you on the second point. Find an organization with good programs, and let it do its thing! Donors who micromanage every penny can pressure the charity into pound-foolish decisions, like wasting staff time struggling with old computers instead of buying new ones. Restricted gifts are even worse: it's difficult to pursue a coherent strategy when your donors have allocated the cash into a hundred little fiefdoms.
That said, my bar for trusting an organization is pretty high. It's not enough to have a strong brand, or even good Form 990 financials. A four-star rating from Charity Navigator tells me that an organization is spending money on actual programs, but it doesn't tell me the most important thing: how much good do those programs actually do?
I've gotten on this soapbox before, but it deserves repeating. To get serious money from me, charities need to scientifically measure the impact of their programs, transparently report the results, and prove that they deliver good value. There are amazingly few that meet this standard, but the researchers at givewell.org have identified some real gems.
Posted by: 08graduate | May 27, 2012 at 11:44 AM
I tend to fall in the second category. I would note that the attitude and lifestyle of the leadership is also key. If they are hesitant to share information or offended that questions are asked, then be wary. If they are humble and accommodating - viewing donors as partners in the work - then that is a healthy sign.
Posted by: Bruin | May 27, 2012 at 10:02 PM
Some years back, I was the "hesitant giver". I need to be informed what the charity does and where the money will go before I give my donation. Lately, things have changed. When I give the money, I believe it is their money already and it is up to them how they will spend it. Should they use it for selfish cause, I believe that they are not accountable to me but to God.
Posted by: Cherleen @ Barbara Friedberg Personal Finance | May 28, 2012 at 07:50 AM
Cherleen, that is a good approach, though I still would like to do some research on an organization before I donate. I confidently donate to my church, but I am a bit leery of other organizations.
Posted by: Melissa@LittleHouseInTheValley | May 28, 2012 at 09:15 PM
I give out more in the form of goods that can be useful to the needy. this way i am always sure that it will prove helpful to the person.
I did also donate money to NGOs but was never confident about their works.. *I see their ads on television which meant they must be spending at least something (if not all) for marketing,,, so i did not like the idea mush
Posted by: Jim | May 29, 2012 at 09:24 AM
You raise a great point--how informed should one be before donating ones time or money to a given charity? I find myself wondering this almost every time a church, non-profit, or other organization asks me for a donation. Most of the time I don't know where to start in seeking answers. Do you have any advice, especially with unfamiliar organizations? It's one thing to go to your church and ask where the money goes, but I'm not sure I would feel as comfortable asking a non-profit. Thanks for your advice!
Posted by: Ruth | May 29, 2012 at 05:23 PM
I agree with you by going with point number two. It's important to do your research before giving to any charitable organization. However, you never really can know exactly where every dime is going. At some point you have to just trust that your money is reaching the right hands - but that doesn't mean you have to stop the research! Keep tabs on what your organization is doing and you can not only learn if you should continue to give to them, but also how they are changing and growing. This is an investment so why not keep yourself mentally invested as well!
Posted by: Shannon-ReadyForZero | May 30, 2012 at 12:02 AM