5 ways to determine whether foundation is virtuous

5 Ways to Evaluate a Charitable Organization

One of the highest virtues of being human is our capacity to help one another in times of duress. Based in Florida, Health Insurance Innovations Foundation has seen many hurricanes cause immeasurable damage.  When tragedy strikes, be it or volcano eruption or children stuck in underwater caves, it is human nature to want to help but often we don’t know how.

Fortunately, there are millions of people working for foundations and organizations making the world a better place, one action at a time. The tricky part is ensuring donations to such organizations have their intended effect, and discerning who is acting selflessly and who is acting selfishly isn’t always obvious.

When tragedy strikes, organizations will come out of the woodwork soliciting donations. Some of them are well known, like the Red Cross. However, a recognizable name doesn’t mean that your donations are going where you intended and making a positive impact. The Red Cross is notorious for their lack of efficacy and transparency during disaster time, from the Earthquake in Haiti, to Hurricane Katrina, to Hurricane Harvey, and much more. They never disclose where your money is going and rely too heavily on donated goods which results in a surplus of supplies that aren’t useful, in some cases have been criminally negligent, and in worse cases mislead Congress.

Clearly, we need to do a better job researching organizations who take money promising disaster relief and holding them accountable. Here are 5 tools ways to help determine whether a foundation or charitable organization is virtuous and transparent.

  • There is a tool offered by the IRS that searches their databases called “The Exempt Organizations Select Check Tool”. You enter the name of an organization like “American Red Cross” and you can see if the organization is tax exempt or not. This is very important because some organizations claim 501(c)(3) tax exempt status when they really are not and operate for profit, which means your donation won’t be tax deductible.
  • Charity Navigator is a website that has evaluated over 8000 tax exempt charities with different metrics such as financial health, accountability, and transparency in order to help donors make the most informed decisions about where they choose to donate and how they can have maximum impact. If you don’t see the organization you want to donate to it’s possible that organization won’t have the helpful effect you’re hoping for during disaster time and you should consider another one.
  • GuideStar maintains information on 501(c)(3) nonprofits. Financial documents, such as the 990, help you evaluate the legitimacy of an organization. The 990 discloses where and how an organization’s donations are spent, including the earnings of top officers. All nonprofits are required to have up-to-date 990’s available to the public. If an organization does not have this info readily available or is not forthcoming if you request it from them, you may want to reconsider your donation.
  • Charity Watch rates charities on important metrics like advice, articles, and basic information that are open to the public, but members-only access gives further insight into specific charities. They also expose instances of abuse. To become a member and access all of their reports, you have to make a donation.
  • Give.org helps donors by evaluating organizations based on the criteria set by 20 different standards that include governance and oversight, effectiveness, finances, solicitations, and informational materials, for which charities earn a point each. If an organization does not score a 20 out of 20, the chances are something shady might be happening, and you might want to look elsewhere to make donations. .

More Suggestions for Donors:

Reputable charities and organizations have many different secure payment option that aren’t limited to cash donations. Be wary of any who are soliciting cash only donations or asking for help via text. e careful with giving your credit card number over the phone or to an organization that only wants cash donations. If you see language stating that 100% of donations will go to the cause, that’s another red flag, because all organizations have operating expenses.

Another issue with assistance not getting where it needs to go is due to how humans respond to tragedy in general. We take a reactionary approach rather, which is much more expensive, rather than listening to experts and doing what’s necessary to prevent large scale disaster. In Texas, some towns heeded the warnings of climatologist and shored up their defenses against hurricanes, whereas others did not and suffered.