Feeling charitable? Steps to take before writing that check

I may be biased, but I believe that most Americans are inclined to be generous. According to the National Philanthropic Trust, Americans donated $389 billion in 2016, with 72 percent coming from individuals.

As kids, we start this journey of generosity by participating in car washes, bake sales and walkathons to raise money for all kinds of projects. And when we’re older, we attend charity auctions, tithe at our church or synagogue, or remember our favorite charity in our will.

The opportunities to give back in this world seem to be endless. But as we intuitively should know, not all charities are created equal.

If we want to be sure our charitable dollar is making the right impact, here are steps to consider taking:

1. Examine the charity’s mission statement, available either on its website, printed annual report or Form 990 tax return (go to guidestar.org). Is their mission aligned with your interests and values? Effective philanthropy starts with having a clear purpose.

2. Review the charity’s financial information. Verify its tax-exempt status. If it has a profile on The Giving Partner website (thegivingpartner.guidestar.org), you can examine its budget, audited financial statements and tax return. Is the information provided fairly recent? Does the balance sheet contain enough cash and are assets greater than debts? Is it operating in the black? What percent of the budget is spent on programs compared to administrative costs? Look for signs of financial health so you know the donation will be a good investment.

3. Understand the organization’s sources of funding. Does it rely heavily on donations, and if so, does it have broad support or are there just a few major donors? Try to assess the financial viability of the charity from these sources.

4. Look at the outcomes of the charity’s work, which should be documented and updated annually. Understand who the charity has served, how it provides services and if the number served is increasing over time. Great nonprofits should make a lasting impact on the clients and the communities they serve.

5. Determine the charity’s reputation/ratings by going to the Charity Navigator’s website (charitynavigator.org) or if you are supporting a global organization, Charity Watch (charitywatch.org/home). You may be able to read some testimonials on their website.

6. If you are making a significant donation, you should probably meet with the organization’s leadership and understand their qualifications to run the programs they do. Consider their tenure with the organization. Is the management stable and effective?

7. Understand who serves on the non-profit’s board of directors: Are they community/business leaders who can support the organization well? Is the board the right size for this charity? If you are considering joining the board, consider meeting a few board members and perhaps “audit” a board meeting first.

8. Determine other ways you can help the charity besides providing financial support. Sometimes volunteering with one of its programs will provide help it truly needs and also allow you to learn more about the organization – from the inside out.

Once you’ve made a charitable commitment, congratulate yourself for giving to a worthy organization. You’ve joined the good company of millions of Americans who make a difference every day.

This story was originally published August 14, 2017 at 11:45 AM with the headline "Feeling charitable? Steps to take before writing that check."