How to Insure Maximum use of Dollars Donated to Nonprofits

During economic downturns and misappropriation of charitable funds headlining the national news, donors are becoming more discerning about their charitable giving. Here is how to determine whether or not a nonprofit charity is maximizing the donations they receive.

Difficulty: Moderately Easy

Instructions

1. Read the annual report of the nonprofit organization in question. According to the website Charity Navigator, less than 25 percent of the budget should go towards administrative costs. This includes the costs of fundraising. Nonprofit charities with administrative costs under 5 percent of their budget are considered superbly managed.

2. If you feel really passionately about a nonprofit charity, give them a direct donation. Corporations that give a portion of their product sales to a charity does not yield as much for the charity as a direct donation would. For example, twenty percent of dinner sales for one night sounds like a sizable amount of money could be raised. In reality, after the tax and drinks were discounted from the total along with the effort to the market the dinner, one dollar and fifty cents net per dinner is not a lot of money.

3. Consider giving only to endowment funds of a nonprofit charity. The principal of the money can never be used; the interest it generates is placed into the annual operating budget of the charity each year.