Charity is a noble and humane practice. Today, people and corporate organizations both opt-in for charity in their unique ways. The charity activities range from saving the planet by planting more trees, helping survivors of any natural calamities, social causes like educating and feeding children, supporting medical brands trying to combat COVID-19 with monetary assistance, or other useful suggestions. Charity also points towards the tithing practice, where people contribute a specific part of their income to a charitable cause.
Most people think of an NGO when they think of charity. It comprises of disaster relief organizations, hospitals, community groups, and sports teams. According to studies and researches, the United States consists of 1,409,430 tax-exempt organizations that include:
- 96,655 private foundations.
- 9,48,769 public charities.
- 3,64,006 “other types” of NGOs, including civic leagues, chambers of commerce, and fraternal organization.
There are several charity types in your city that you can opt-in for! If you resonate with natural causes, you can join hands with a company that works for causes like forest conservation; preserve greenery, cleaning water bodies, and many more. If you resonate deeper with social causes, you can volunteer for projects related to girl child abuse, human trafficking, helping the people below the poverty line, and so on.
However, with several choices available, it is essential to choose an authentic charity organization. There have been instances of fake charity organizations misusing people’s money. You need to check out the organizations and their projects, fund utilization, and also management practices. Jonah Engler, a philanthropist, shares some factors essential to consider before opting in for a charity organization.
Choosing a charity organization – Important guidelines by Jonah Engler
The charity’s mission
It is essential to learn about the charity organization’s mission and objective. That would help you discover essential facts about them. The mission statement for the company also comes across in the by-laws in a few sentences. Every charity organization must mention their mission statement and file the 501(c)(3) application. The majority of charities comprise the mission statement in a strategic location on the website.
Is 501(c)(3) charity?
It is essential to get clear on this. Several people assume that since a company is seeking donations and contributions, it is an official charity. And sometimes, there are occurrences where the individual or group gets created for other sets of reasons. Having the 501(c)(3) certification offers assurance that it’s a genuine charity company. It makes sure that the donation and other monetary contributions are tax-deductible.
Not every contribution gets considered as tax-deductible. The gifts given to a company as the tax-exempt under any tax code apart from 501(c)(3), might not be tax-deductible. Some donors get in touch with such organizations until they know about the tax status and identify the organization’s objective.
The overhead expenses
It’s a standard norm, that approximately 15% of the overall budget gets sanctioned as an upper limit for the overhead costs. Simply put, overhead is the cost percentage that pays for fundraising and administrative expenses. There are no specific rules that are applicable to the non-profit, even though 15% is a perfect estimate.
Also, the NGO’s usually spend various amounts on the budget on costs, based on the nature of their job. A few beneficiaries can be present in the remote parts of the world. It might lead to increased transportation expenses, which can lead to overhead costs, that surpass 15% of the threshold. It is true when the NGO effectively caters to the intended recipients.
What is the amount paid to the CEO?
Both press and people criticize the NGO CEOs for earning increased salaries. Usually, the CEO’s of respectable and leading NGOs possess an MBA certificate and comes with adequate business scopes. They get hired for their expertise and experience they bring in to the organization, in finding appropriate projects and talking about the same to the world. Hence, if the CEOs are getting paid a reasonable and lavish salary, chances are they have earned it entirely with their vision, hardworking and smart thinking. Several CEOs speak about the lessons learned while forming a charity organization that provides a positive perspective. You can ask a similar question and get the relevant details.
Is it essential?
Is the NGO essential to anyone you are aware of? Do you have someone in the family who has Alzheimer’s and dementia? If yes, then joining hands with a company that deals with similar projects will be helpful. It will bring forward a personal motivation for you and make you contribute willingly.
It is essential to consider the impact
Does your charity organization have a significant impact that it claims? And are their works and multiple projects making a difference to people? Donors want their money and time to have a specific effect. Hence, you need to assess an organization on this correctly before and then decide to join hands. Always know that a brand-new NGO might require some time to reach to it potential and start creating impact. Hence, it is a smart call to opt-in for a charity group that has been present in the market for a while.
Who is donating in this organization?
Some donors keep a check on the other people that contribute to the NGO. It’s the reason why the NGOs mention gifts in their brochure. The donors might get caught up and unaware of evaluating a charity. For them, a famous doctor’s gift is as essential as the endorsement.
The overall companies today present an overwhelming figure. All the tax-exempt companies should file the 990 for a single year. It is easily available to other people and has its own value. You can also visit the information and ratings to check out the explanation of all the costs. These are the seven things that are essential to keep in mind when planning for a charity. You can also ask for a reference from your loved ones and dear ones about an accountable and authentic charity company. It will help you to join hands with an organization that follows transparent practices.