The ghost of Ebeneazer Scrooge is having a field day at our house. Every night, seated at the dinner table, fork poised in mid air on it’s way to my mouth, the phone rings. And just like Pavlov’s dogs, I jump up to snatch the phone from its cradle before it rings again. What is it exactly I’m hoping for on the other end? Do they ever call lottery winners on the phone? For each time I say ‘hello”, I am disappointed. Inevitably at that time of night it’s a telemarketing service calling for yet another charitable contribution.
I used to listen politely, decline to contribute, hang up and feel guilty. But why? We make charitable contributions every year to worthwhile causes. Just not the ones who hire & pay telemarketing firms to call us….So to get the most bang for my charitable buck and have something new to say to those pesky callers, I’ve adopted a more business-like approach to my charitable side. This holiday season I’ve decided to become a “Charity Venture Capitalist”.
Whether you have $100 or $100,000 to give to charities of your choice, you, too, can be a Charity VC. You just have to perform a little due diligence:
5 Questions to Ask Yourself First
1. Do I want to give locally or globally?
Giving locally, of course, has a greater impact on a smaller number of people. Philosophically, are you more interested in supporting causes around the world, where the money may help those in dire straits, or are you committed to your local community where you can see the direct impact of your giving? This discussion has sometimes been a heated one in our own household, but over the years we’ve learned to compromise and do both.
2. What is my total amount I am willing to give this year?
Ideally, this amount is determined when you are doing your annual household budget, but if not, add up what you’ve done willy-nilly so far and figure out how much more you want to give before the end of the year. Those $25 and $50 contributions to every solicitation you receive in the mail can really add up! Budgeting ahead of time also helps reduce those times you succumb to a plea from a co-worker, friend, telephone call, etc. You can reply with confidence, “I have already allocated my charitable donations this year, maybe we could consider it for next year.”
3. Do you want to concentrate your giving or spread the wealth?
Again, whether you give locally or globally, decide if you want to have a greater impact on one organization or if you will feel better by giving a little bit to a lot of charities.
4. Do you prefer to establish a long term relationship with your charities of choice or is this a one-time shot?
Some things are so important you may want to establish an annual gift amount to the same organization year after year. Or you may even decide on an escalated giving approach ($25 this year, $50 next). Other worthy causes cross your radar only because of something you are doing today. When you choose your charities, consider which type of relationship you want to have with each of them.
5. Do you want to entertain those phone solicitations or not?
With rare exception, those phone calls are made by professional firms hired to solicit your money. Consider what the organization is paying out of your dollars to hire the callers. Since you will get many calls through the year, consider what your response will be and stick to it.
5 Questions to Ask the Charity
1. What is their mission (and do you understand it?)
If they can’t articulate exactly what they are trying to achieve, how are they going to spend your money? Can you explain to someone else what they do? Most charities should be able to provide a written mission statement, which you should request. But, just as important, what kinds of programs and activities are they actively doing to support the mission?
2. How much of my money goes to operations vs programming?
Ask for the Annual Report. Any VC investor would. How much of your hard earned dollar will actually pay for programming and how much goes to pay salaries, fundraising costs & other overhead? A good rule of thumb is the 75/25 rule. At least 75% to programming, no more than 25% to overhead.
3. What are their long term goals and what are their short term needs?
This is kind of like investing in public versus private companies. Many organizations are heavily focused on current needs & short term projects, similar to quarterly earnings reports. Quick results keep investors happy. But it is also critical for charities to have well defined long term goals that can’t be accomplished in a single year. They have spent the time defining a long term goal and a plan to get there. The best charities have both.
4. What kind of progress are they making?
An organization can have the best mission statement and lots of ideas, but are they making any progress with your money? Over the years, anyone can establish a 501c-3 non profit organization and solicit donations, but are they successful at what they are doing? The ultimate long term goal of many charities would be to be so successful at their mission that they put themselves out of business, I suspect… Make sure your dollars aren’t going into a giant sinkhole.
5. What is their charity rating?
And finally, you’ve narrowed the field to several qualified candidates. Do your final bit of due diligence by going on one of the charity evaluation websites that have proliferated in the past few years. One of the best is www.charitynavigator.org. They rate the charities on several different attributes, so you can get the best results for your worthy contribution.
Charles Dickens would be proud!
Photo by: UK in Italy