Where should you donate your money? How? How much? How do you know if you're getting your money's worth? Like Maimonides' eight levels of charity what follows are eight good questions to start asking.
1. How Do I Pick a Cause?
Go with your passions, says Susan Grinel, director of the Family Foundation Center of the Jewish Community Foundation, a nonprofit organization partnering with donors, professional advisers and agencies in all aspects of charitable giving. Ask yourself what you care about, what your passions are, Grinel says -- that should give you a good place to start. If it's a broad passion, such as helping children, you can narrow it down by determining whether you want to help children in areas of poverty, mental health, education, etc.
"Then you can zero in on a program," Grinel said.
Many people also donate money in honor of someone, and that can help in choosing the type of cause for a donation. Grinel recently helped two siblings who wanted to honor their deceased sibling, a social worker. She came up with a menu of possibilities, and the two decided to sponsor a Chai Lifeline scholarship to send a child with cancer to Camp Simcha, a place for children facing serious illnesses.
"My sister loved helping others in needand was a mental health counselor and worked with handicapped and sick individuals. She wanted to make a difference and help people smile," the woman's brother said. "Providing an opportunity for these kids to go to a camp and enjoy themselves means the world to us, and I know it means the world to my sister."
2. What If I Don't Have a Particular Passion or Gift in Memoriam?
"If you don't have something specific, the best thing to do is give to an umbrella," Grinel said.
For example, if you want to donate to a Jewish cause, you can donate to The Jewish Federation, and if you want to give to a general cause, you can donate to the United Way.
"That's what they are there for," she says. Umbrella and large organizations have the staff and experience to investigate worthwhile charities.
3. Should I Donate to the Organization in General or Target My Funds to a Specific Program?
Most people involved in the world of philanthropy agree: targeted donations, or donating to a specific program or event rather than making a general donation to an organization, are growing more popular. They allow people to connect to and follow a concrete and specific goal, such as feeding the hungry in a specific town in Israel, or taking a group of poor inner city kids to the country for the day.
"The trend line among younger people is to know what they are giving to and how they are giving," said John Fishel, president of The Jewish Federation of Greater Los Angeles. "It's not necessarily a bad phenomenon, but in the extreme it's a bad phenomenon, because where's the collective action when you need it?"
When you donate to the organization as a whole and not a specific -- and perhaps trendy or popular -- cause, "you are allowing the organization to make a decision on how the contribution should be made," Fishel said.
4. At What Level Donation Will I Be Involved With the Charity?
Not to put a figure on charity, but anything less than $3,000-$5,000, Grinel said, should probably just go to operational costs rather than influence a specific program.
"An agency is not going to respond if you're in a smaller bracket," she said, adding "it's harder to target your dollars to something specific, because they have to track those dollars. When they're also trying to keep their lights on at the same time. You don't want to take away from their operation."
5. Is It Better to Give to Many Charities or Just a Few?
"Unlike your investment portfolio, diversification isn't a good strategy when giving to charity," advised Charity Navigator, an online resource for evaluating charities. "We suggest that you take the time to find a few well-run charities that match your interests and make a commitment to support those charities over time. By concentrating your giving among a few outstanding charities, your donations will do more good than if you contributed small gifts to a wide array of charities."
On the other hand, Grinel says that it depends on what you are trying to accomplish.
"If you're trying to accomplish something in a field, it's better to develop a relationship with an agency over the years," she said. "If your purpose is to respond to requests that come in, then certainly you can give smaller amounts to a variety of places."
Also, she said, we all have a limited amount of time and energy, and if you must track your donations and their progress, it might be best to concentrate your donation.
6. What Financial Information Do I Need to Know About My Charity?
There are a number of online charity guides such as Charity Navigator and Guidestar.org that evaluate charities based on their tax returns, operational overhead, and CEO salaries. Organizations such as The Jewish Federation and the Jewish Community Foundation can also assist donors in investigating a charity.
Fishel said that many individuals call them to check out a charity they are interested in.
"Many organizations come to us -- particularly [about charities that are] international in scope, looking for the imprimatur of the Federation, and it makes it easier for other individuals and gives them legitimacy," he said.
Charity Navigator says to check the charity's 501(c) (3) status, to insure that at least 75 percent of the organization's budget is spent on programs and services, and less than 25 percent on fundraising and administrative fees. (Grinel advises an 80 percent to 20 percent split.) Ask for the three most recent 990 forms if they're not available online, she recommends checking the Web site."Not only can the donor examine the charity's finances, but the charity's willingness to send the documents is a good way to assess its commitment to transparency," she said.
You should also review executive compensation, and be able to compare it to comparable organizations, Charity Navigator advises: "Sophisticated donors also put the CEO's salary into context by examining the overall performance of the organization. They know it is better to contribute to a charity with a well-paid CEO that is meeting its goals than to support a charity with an underpaid CEO that fails to deliver on its promises."
But don't go only by the numbers.
"There's a tendency now to rely on the Web-based charity services like Charity Navigator and GuideStar," Fishel said. "Sometimes it may be helpful -- but I think it's looking at apples and oranges and kiwi fruit: Charities are different, the nature of the structure, how they report things are all different," he said. "When in doubt, talk to a charity directly."
7. How Do I Know If a Charity Is Meeting Its Goals?
Charity Navigator recommends all donors take time to ask charities about their programs, missions and goals. Some questions include: Can your charity clearly communicate who they are and what they do? Can your charity define their short-term and long-term goals? Can your charity tell you the progress it has made (or is making) toward its goal? Do your charity's programs make sense to you? Does the organization have the expertise and capacity to enact its proposals? Is there a clear work plan with a realistic time frame, specifying the activities, interventions, services, and/or programs that will be carried out? Is there a clear plan for evaluation?
8. What Other Pitfalls Should I Look Out For?
Charity Navigator says to be aware of mail and online scams. (In recent years many people have been swindled by e-mail scams.)
Fishel said to be aware of duplication of charitable efforts.
"Very often I find people are giving to things that are already in place," he said. People go with "the flavor of the week. In the last few years, there was a growing disparity between the haves and have-nots, and a number of new charities proliferated. Not everyone did due diligence to where the money was going," Fishel said.
Of course, sometimes new initiatives headed by young, energetic and connected people can bring an influx of funds to a little-known or particular cause.
In general, Charity Navigator said, don't worry: "Our research has shown that the overwhelming majority of charities in this country are not only responsible and honest, but well-managed. So we give with confidence. You should feel the same way before you give.
Do whatever it takes to put your mind at ease. Use your rights to gather data so that you will be comfortable. Good charities will encourage this. A happy and trusting donor is a willing and supportive donor."
For more information, visit http://charitynavigator.org.