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The Quick and Easy Method to Determine If A Charity Is Worth Donating To

The Quick and Easy Method to Determine If A Charity Is Worth Donating To

We live in an age where things go viral on an almost daily basis. Gone are the days when ideas and videos needed time and a lot of effort to become widespread. In 2014, you can post a video of your cat wearing a birthday hat before work and come home to 2 million page views if you strike the right cord with your feline-friendly compatriots. This is great news for charities. Whereas in the past not-for-profits needed to spend a lot of money and resources getting the attention of would-be donators, now all they need is a good idea and an internet connection.

Case in point, the recent viral sensation that was and is the ALS Ice Bucket Challenge. In a few short weeks the ALS Association saw a flood of ice water turn into a flood of donations raising over $100 million compared to $2.8 million in 2013 according to Time. But with the potential for any new cause to pop up on your newsfeed on any given day, how do you sort the legitimately good causes from the organizations that might not use your money as effectively? Use this guide to find out.

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Measuring the Need

An important question to ask is if the cause at hand is a major problem that needs to be addressed. A charity that knits coats for homeless dogs may not be as pressing to give to as one that aims to fund biomedical research on a debilitating disease.

Finding Their Form 990

It turns out, every US-based charity is responsible for filling and making publically available what is called an IRS Form 990. Yes that’s right, it is the taxman to the rescue. All you need to do to find the Form 990 for most charitable organizations is to type the name of the charity and “Form 990” into your favourite search engine. If you run into any problems finding the one you are looking for you can also sign up for a free registration at a website called GuideStar where you can find financial info for most major charities.

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Income v. Expenses

Once you have the 990, all you have to do is know what to look for. Thankfully, most of the useful information is summarized in a few lines on Page 1 of the document. Line 12 denotes the organizations total revenue for the previous year and Lines 13 through 19 explain how they spent that money.

Administration Fees

Every organization will have some administrative costs associated with its operation, but are those fees in proportion to the good they are doing.  Line 16b of Form 990 tells you how much the charity spent last year on fundraising fees, which is a good indication of efficiency when compared to overall revenues.

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What Do They Spend on Grants?

Specifically Line 13 is the dollar amount given out by the charity in grants and other similar funds. This is the money that goes to do the good work the charity is known for. The higher the number on Line 13 compared to the number on Line 12, the more of your money goes towards working on the cause you were interested in when you donated.

How Much Do Their Executives Make?

Another handy feature of Form 990 is that Page 8 outlines the salaries of the organizations highest paid employees. This allows you to quickly and easily see how much of the fundraising money from the organization goes into the pockets of the people doing the fundraising.

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What Do They Spend on Marketing and Other Contract Work?

The bottom of Page 8 also gives the dollar amounts spent on private contractors for things like marketing and media productions. Take a look and ask yourself if the numbers are acceptable to you in terms of what the charity is spending money on.

Really that is all there is to it. If the charity you are interested in is not based in the US things can be a little trickier, but not much. A quick search using the charity’s name and “financial information” will generally give you what you need. For example, the detailed income and expenses for the Canadian David Suzuki Foundation can be found online here. If you’re interested in seeing what a real Form 990 looks like, this link will take you to the form for the ALS Association. And there you have it. You will be well prepared to do your research on the next viral cause that captures the global imagination. Happy giving!

Featured photo credit: Howard Lake via flickr.com

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Published on September 17, 2018

How Being Smart With Your Money Leads to Financial Success

How Being Smart With Your Money Leads to Financial Success

Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

1. Avoid being “penny wise but pound foolish”

It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

2. When you want something big, wait

Impulsivity can get you in trouble in most aspects of life. Finances are no different.

It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

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So, you get the itch.

You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

Here’s where you have to take a step back.

Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

The impulse faded. And you just saved yourself a ton of money.

3. Live smaller than you can afford

You finally get that big raise. And you want to celebrate – and why not?

You’ve been looking forward to this forever. And after all, it was all due to your hard work.

That’s fine, splurge a little. However, make it a one-time deal and be done.

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Don’t get caught in the trap that just because you’re now making more money, you should spend more.

Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

4. Practice smart grocery shopping

Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

Create a grocery budget

Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

Make a list… and never deviate

Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

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You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

These impulse decisions will lead to overspending, which will derail your grocery budget.

Eat before going grocery shopping

It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

This makes it much easier to stick to your grocery plan.

5. Cancel your gym membership

Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

The average gym membership costs around $60 per month. That’s $720 a year.

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Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

It’s baby steps… And baby steps can start now!

I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

Featured photo credit: Unsplash via unsplash.com

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