Evaluate a charity before giving

Americans want to give back: According to Giving USA, charitable contributions hit an all-time high of $373.25 billion in 2015 (the latest figures available). That amount included donations from individuals, estates, foundations and corporations.

Now take a minute to think about which of those four groups gave the most. (Pause. What do you think?) By far the largest amount was given by individuals, at $264.58 million, or a huge 71 percent of the total.

As one of those individuals, how do you know whether a charity you are interested in provides the services they advertise and uses your donations effectively? It’s important to do your research to make sure your donated dollars are doing the most good. Here are some ways to evaluate your chosen charities, provided by Charity Navigator, one of several nonprofits that rate charities:

• Take an active approach. Take some time to identify which charitable causes you and your family would most like to support. Write down specific giving goals. For instance,

rather than donate to a large animal welfare organization that advertises on TV or calls you at home, search out organizations with specific goals such as raising funds for animal shelters in your area.

• Avoid telemarketing

pitches. When you pick up the telephone and listen to a pitch for a charitable cause, it can be difficult to say “no.” However, telemarketing campaigns are expensive for the charities involved and often use up most of the dollars raised. Charity Navigator advises you to avoid giving out a credit card number over the phone. Instead, hang up and research the charity first. If you want to support the organization you can send a direct donation.

• Check for tax-exempt

status. Always confirm that any charitable organization you support has been granted tax-exempt status by the IRS, known as 501(c)(3) status.

• Understand the group’s finances. Before you make a long-term commitment to a charitable cause, you should understand where the organization spends its money. Ask the charity’s representatives to send you its

Form 990 documents. This is an IRS form that lays out financial information on nonprofits, and the IRS requires nonprofits to provide their last three annual Form 990 documents to the public. According to Charity Navigator, the most efficient charities spend at least 75 percent of their resources on mission-related services and 25 percent or less on administration and fundraising efforts.

• Look at the executive’s pay. Compare what your charity pays its top executive with the average pay for executives at similar nonprofits in the same region. Charity Navigator says the average nonprofit CEO is paid about $150,000, with compensation highest in the Northeast and at charities that specialize in education and the arts. Charity Navigator provides salary-benchmarking data online with its CEO Compensation Study.

• Focus your giving efforts. Avoid donating money to a large number of nonprofits. Once you’ve done your research and decided that you are happy with the goals and results of one or a few organizations, concentrate your funds on those groups in order to maximize the impact of your donations.

• A family affair. When possible, involve children and grandchildren in your charitable endeavors so they grow to recognize the value in helping others from a very young age. For the giver, the satisfaction of moving from career success to significance through charitable giving can be a life changing experience.