Part 1 : Lets Uncover The Charities "Financial Health"
All charities have their own formula; the one they adhere to concerning how donated monies are distributed and used. in this case there are two areas you should be paying attention to. As a percentage look at what is allocated to internal, administrative and fundraising efforts (cost of running the charity) and look at what percentage of the dollars are distributed directly to the actual cause the charity claims to support with your donations. Charity Navigator as an example likes charities that follow at least a 25% to 75% distribution between Administrative/ Fundraising costs and funds spent directly on the cause respectively. They have more in-depth information for you to evaluate under their “Evaluating Charities” section.
The bottom line is to dig deep, research multiple approaches, and then make an educated decision about what works best for you. Generally the more the charity is willing and able to allocate to the actual cause the better. Of course there are additional criteria that also play an important role when rating the quality of the Charity which we will continue to cover in upcoming posts.
Next Time: Reviewing the Charity's "Executive Pay" Numbers and Philosophy
Scott Davis is 30 year Business professional and former member of the Oakland Raiders . He writes a number of blogs on Charity, Business and Sports topics