How to Pick a Worthy Charity

by Greenberg Glusker Fields Claman & Machtinger LLP
Contact

[author: Darryl Cluster]

Clients frequently ask for recommendations for their charitable giving. In some cases, donors have a clear idea of the area of activity to support but do not know how to identify the most worthy charities. Other clients have identified one or more charities but are unsure as to whether those charities are deserving of their support.
Fortunately, the Internet provides a forum for the development of charity evaluators, which can provide a tremendous amount of information to those seeking to make informed charitable giving choices.

Internal Revenue Service Website

The fundamental question for donors is whether a donation will qualify for a charitable deduction. The IRS administers a website (www.irs.gov) that includes a "search for charities" tool. Using this tool, donors are able to confirm that an organization is recognized by the IRS as eligible to receive deductible contributions.

Guidestar

The mother lode of information regarding charitable organizations is Guidestar (www.guidestar.org). Guidestar provides free access to basic information for almost 2 million charitable organizations and also offers fee-based services that allow professional users to access detailed reports generated from the organization’s sophisticated data digitization and database management services.
However, Guidestar’s prime drawing card is that it provides free access to full copies of the IRS tax returns filed by hundreds of thousands of charitable organizations. The IRS charitable organization tax return, particularly the recently revised Form 990, which is filed by most charities that solicit contributions from the general public, provides a substantial amount of information regarding the operation and administration of a charitable organization. The available financial data includes the amount of money raised both from contributions and from other sources of revenue as well as the amount of money spent on charitable activities, administrative services, fundraising and investment management. In addition to financial information, Form 990 provides details regarding the organization’s charitable activities, governance and management, and, if applicable, any embezzlement, theft or other fraudulent activities.

Charity Navigator

Charity Navigator (www.charitynavigator.org) evaluates U.S. charities primarily on the basis of two criteria: (i) financial health and (ii) accountability/transparency. Charity Navigator’s analysis of these two benchmarks is based primarily upon a review of the charity’s Form 990 as well as information available on the charity’s website. Charity Navigator processes this information and then issues both numerical and starred ratings for each charity it evaluates. In addition to the ratings, each charity’s entry provides specific information regarding financial performance metrics and a checklist of good governance indicators. Charity evaluations are accessible by category (e.g., education, human services, religion).
Charity Navigator’s approach should appeal to those donors who believe that a charity’s financial health is the most authoritative measure of its worthiness, and who prefer an easy to apply evaluation metric. On the other hand, Charity Navigator’s methodology has been criticized for its overreliance on Form 990 and its undervaluation of a charity’s charitable activities.

GiveWell

GiveWell (www.givewell.org) applies evaluative criteria that are similar to Charity Navigator’s but investigates each reviewed charity in much greater detail and, as a result, provides a much smaller database of recommended charities. GiveWell’s philosophy is to support a few outstanding charities rather than to spread support among many charities. Givewell features just two charities as its top-rated charities, and offers reviews of just a handful of other top-performing charities. The level of detail and well-reasoned analysis that GiveWell is able to provide offers a glimpse of an ideal resource for charitable donors. Unfortunately, GiveWell’s database is far too limited for many donors.

Philanthropedia

Philanthropedia (www.myphilanthropedia.org) is a division of Guidestar, but, in contrast to Charity Navigator and GiveWell, its evaluation methodology is based upon the opinions of philanthropic experts, such as foundation professionals, academics and researchers, rather than the objective data provided on Form 990 and other resources. These philanthropic experts fill out surveys provided by Philanthropedia, which then applies the findings to rank the evaluated charities within various categories of charitable activities. Each evaluated charity’s entry includes a summary of the expert comments as well as narrative descriptions, basic financial information, the Charity Navigator rating (if available) and a link to the charity’s Guidestar page.
Philanthropedia provides a pleasing balance of subjective and objective information. At the present, its small but rapidly expanding database will likely frustrate many donors unable to find a rating for a desired charity. However, for those charities that have been evaluated, the Philanthropedia review provides a subjective component missing from Guidestar and Charity Navigator.

Great Nonprofits

On the far end of the populist approach, Great Nonprofits (www.greatnonprofits.org) provides a forum for anyone to post a review of a charity in the manner of a consumer website like Yelp. Great Nonprofits does not utilize any objective criteria as its starred ratings system is based entirely upon reviews submitted by site visitors. Great Nonprofits has listed information for more than 1.8 million nonprofits, only 13,000 of which had been reviewed.
Great Nonprofits is an easy target for criticism due to its largely unfiltered review system. Such criticism may be particularly apt with regard to reviews of charities, because in many cases, charitable organizations are unable or unwilling to prioritize "customer service" over more pressing charitable concerns. Nevertheless, if the breadth and scope of the Great Nonprofits approach were to expand exponentially in the coming years, one can imagine that it may become a powerful tool in the field of charity evaluation as a collection point for a vast and diverse database of shared first-hand knowledge.
The field of organized charity evaluation is still new, and there are some very basic concerns that must be addressed before a donor can rely on one or more of these services without some caution. However, the advances made by charity evaluators in the past decade offer hope that in the not too distant future a donor will have the tools to make charitable giving decisions that are informed equally by the head and the heart.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Greenberg Glusker Fields Claman & Machtinger LLP | Attorney Advertising

Written by:

Greenberg Glusker Fields Claman & Machtinger LLP
Contact
more
less

Greenberg Glusker Fields Claman & Machtinger LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!