Jordan Goodman is the author of Everyone's Money Book, available at 888-201-6300. This is the third edition of the book. You can also visit his Web site at www.moneyanswers.com. He talks with us on Thursday mornings.

December 11, 2003

"Making the Most of Your Gifts to Charities"

So, how are you supposed to separate the efficient from the inefficient charities? Thankfully, many Web sites have popped up to help you do exactly that. All of these sites depend on the charities' filing of IRS Form 990, which shows how much of the money raised goes into providing services for the group’s stated goal and how much goes into administration. As a general rule, you want to make sure that at least 60% of a charity’s money goes into program services and, at most, 40% into administration and fundraising. Those percentages can vary widely by the type of charity, with art museums averaging 68% into programs and food banks 94% into programs, for example. The main way to evaluate a charity is to see if they are achieving their mission.

In order to evaluate charities, here are some of the best Web sites to take a look at:

1. Guidestar (www.guidestar.org) maintains a national database of nonprofits. It doesn’t evaluate the charity, but lists what the charity reports on its Form 990.
2. CharityWatch (www.charitywatch.org) is the charity evaluator run by the American Institute of Philanthropy.
3. Charity Navigator (www.charitynavigator.com) provides ongoing financial assessments of about 2,600 charities to see if they are being financially responsible with donors’ money and if they will be long-term survivors.
4. Wise Giving Alliance (www.give.org) is run by the Better Business Bureau and rates which charities meet its standards and which ones do not, based on their governance procedures and program effectiveness.

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