Choosing charities to give to

Effective Philanthropy Gift Trust news

Cheryl Spain looks at how to find and support charities that fit your giving priorities.

When I tell people about my job, the most common question people ask is “what are the best charities to donate to?” It’s a very good question, as there are so many good causes to support and people often find the choice overwhelming. We all want to know our dollars are making a difference, so how do we find good charities that are making a difference? 

There is no simple answer. There is no magic universally-applicable list of ‘the best’ charities to give to. What you might think of as the best charity, or the most effective charity, may be different to what I think. Giving is a very personal choice, and how you give depends on how you choose to measure effectiveness.

Given that answer, you may not know where to start. Fortunately, helping people think about their giving is what we do at The Gift Trust, and we’ve got some top tips for choosing causes.

Start with your values

The best charities to give to will be ones that resonate with your personal dreams and wishes. Start by asking yourself these questions:

  • What change do you want to make in the world?
  • What are your beliefs, hopes and aspirations?
  • What are the big issues you would like to solve?

These core questions will guide you to the types of sectors you might want to support, and The Gift Trust’s philanthropic advice service can help you work through them.

Dig deeper to ask the tough questions

Here’s some questions to consider in the next stage of your evaluation:

  • Do you want to address the root cause of a problem (eg: lack of affordable housing can lead to homelessness), or would you rather help the immediate need (eg: providing homeless hostels or soup kitchens)? Both are needed and one is not better than the other.
  • Consider your own prejudices and background and that you’ll only see the issues from your perspective. Your view on what could solve an issue may be very different than those on the ground who are dealing with that issue. Ask charities about what they need and what the people they work with want and don’t assume you know what they need.
  • Consider supporting grassroots causes or charities that don’t receive as much funding or exposure as the big names. There are many smaller charities out there that are doing amazing work who don’t receive as many donations because they don’t have large fundraising budgets. Or they may work in areas that are not considered popular with donors – for example, addiction services, programmes for ex-offenders or youth offenders, kaupapa Māori groups, LGBTQIA+ groups, etc.
  • Don’t be afraid to take risks in your giving. New organisations or an innovative pilot programme could be worth supporting if you trust and believe in the people involved. Philanthropic donations are crucial to these types of new entities and to test ideas, because government or institutional funders usually only get involved once an idea is proven.
  • Boost your giving IQ. Fidelity Charitable (an American donor-advised fund) has a great resource kit to help you set your direction.

Do some research

Once you’ve defined your values and dug deeper into some of these questions, do some research to find the charities working in that area. The Gift Trust can help you to do this if you donate through us, but if you’re doing it yourself, here’s some places to start:

  • Charities Services has a searchable database of all New Zealand registered charities, their financials, and their contact details (but doesn’t include charitable causes that are unregistered).
  • GuideStar provides information on U.S. nonprofits, including their financial and programme information.
  • Gift Collective (a project run by The Gift Trust) is a fundholder for unregistered grassroots charitable causes doing good in Aotearoa, and has a list of projects they auspice on their website.

Once you find charities you’re interested in, make sure you dig deeper than simply their marketing materials – read their financial accounts, annual report and ask about their impact.

Dispel the myths

It’s important to address some of the myths about charity effectiveness. Here are some common myths that crop up when people talk about finding good charities to donate to:

“I don’t want any of my donation to be wasted by the charity on administration or staff costs. I want 100% of it to go to the good cause.”

I’ve heard this a lot. It’s a little bit like walking into a café and saying you’re only going to pay $2 for your coffee instead of $4, because you know the rest is ‘wasted’ by the cafe on frivolous things like leasing their shop and paying their baristas. Without those things, the cafe wouldn’t exist. It’s the same with good charities. Staffing and administration are not wasted costs, they’re essential if a charity wants to solve the problem they’re working on.

For example, a charity that runs soup kitchens can’t just spend their money on soup – they have to pay the rent for their premises, submit their accounts to remain a registered charity, and have phones and internet to stay connected with their community. Staff costs are important too, as very few charities can rely solely on volunteers, and paying a decent living wage to attract and retain good staff is important. Instead of asking how much a charity spends on administration, ask what results they achieve. If they achieve amazing results, does it matter how much is spent on administration? If you want to dig deeper into this topic, check out Dan Pallota’s TED Talk.

“I don’t like to support charities that spend money on fundraising and glossy marketing campaigns.”

This is another tricky one. To do the important work they need to do, charities need funding, and therefore supporters, which often requires fundraising and marketing. Some people get annoyed by this, because they think these organisations should be spending their money on their cause, rather than on promotion. However, that core cause can’t be paid for if there isn’t money coming in. FINZ (the Fundraising Institute of NZ) has a code of ethics for fundraisers, and good charities should be signed up to it. You can also check a charity’s financial statements to determine the ratio between a charity’s fundraising costs and its ‘primary’ cause expenses – fundraising should be a means to an end, not an end in itself.

Final thoughts

If you’re generous and want to support good causes, it won’t be difficult to find the right charities. Stick to your values, ask yourself the tough questions, do some research, and don’t believe the myths. Perhaps start with a smaller gift, and then increase it once you get to know the charity better and see what they can do. But ultimately, remember that it’s a question of trust – do you trust this organisation to do good work with your funding? If you do, then trust them to spend those funds wisely.

The Gift Trust can help you shape your thinking and give direction if you donate through a Gift Account – contact us to talk further.

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