How to Make Charity Donations

When you donate money, you want to be sure your dollars truly help others. Consumer Reports' Amanda Walker tells us how to choose a reputable organization.

Jill: Between now and the end of the year, many people will be making tax-deductible donations to charity, but not all charities are worthy of your money. "Consumer Reports" has identified organizations that will truly put your dollars to work. Mandy Walker, "Consumer Reports" Senior Editor, is here with the details. Hi, Mandy. Mandy: Hi there. Jill: Mandy, when you give money to charity, you assume that your dollars are going to a good cause. But that's not always the case. Mandy: Right. Yeah. Some of the money, a good percentage at least of what you're giving is going to help whatever cause you want to fund, but some charities do do that. Some charities do not. So, it's just a small portion. Sometimes a lot of the money goes administration fees or money for fundraising. Now, you understand that some of that has to occur for the charity to keep on going, but the proportions can be very different. Jill: What's - Mandy: So you want check that out ahead of time. Jill: What do you think is a rational proportion? In other words, if I were just to going to look up and say, OK, here's a dollar to the Mandy Charitable Trust - Mandy: Thank you. Jill: What percentage of that should go to running the operation? What's a reasonable number? Mandy: You know, it's going to vary depending on the organization and what they do. If it's an international organization, obviously it's going to cost a lot more money to get things overseas or figure out local networks and get that all set up. So it depends. That's a case where you want to look at different watchdog groups, Charity Navigator, the Better Business Bureau's Wise Giving Alliance, the American Institute of Philanthropy, and they do the work for you. They rate thousands and thousands of charities. So you can look at them. You can see how much of your money is going to, towards the cause, how well the organization is run, etc., etc. They have lots of criteria. Jill: You guys at "Consumer Reports", though, you've come up with your own system. What have you done to compile information? How is it different from going to those websites? Mandy: Well, it's very similar. The way, we went to those three organizations. We divided a lot of different charities up into different categories. So depending on what cause people want to support, cause, charities that help animals, charities that target the environment, charities that target specific diseases, and we looked for agreement among the watchdogs. They either, the charities either get high ratings or they get low ratings consistently. And we made up a list. Jill: Were there - Mandy: We name names. Jill: Were there big differences among the different raters, or was it fairly consistent? Mandy: We only listed them if it was consistent. Sometimes we had to settle for just two, three charities because not every watchdog rates every charity. Jill: OK. So you also said that, for example, an animal lover would check out the Jane Goodall Institute, or that maybe if you're interested in donating to breast cancer research, the Susan G. Komen for the Cure. Why those two? Mandy: They got high ratings from those, from the, from the watchdogs. So they do a good job with your money. It's going towards the cause. They're very efficiently run, etc., etc., etc. Jill: Now, what, what are the steps you take? You do your research, but what if it's a small charity? I mean, how do you know? Mandy: Yeah. It's hard if it's a local charity because the watchdogs may not track them. So then you're more relying on word of mouth. Jill: Now, you also bring up something very, like, sort of sketchy to me. There are some charities that have similar names to ones that I may have heard of. Mandy: Right. Jill: So what are examp, what's an example of that? Mandy: Yeah. The, the Cancer Fund of America, it sounds very much like the American Cancer Society. Jill: Ah, right. Mandy: So some groups that are maybe not so legitimate may have a name that sounds like a name that you know. But even if it's a name that you know, you still want to check it out first. You want to do your research. Just because a charity's been around a long time doesn't mean it does a great job with the money that's given to it. And it could be a sound-a-like. So you do want to check it out. Jill: So, here we are. We're coming into the holiday season. We want people to be charitable. That you find after doing this research that it has been a pretty rough year for charities, or are people still giving despite the recession? Mandy: No. Charities are reporting that gifts are down. So, it, it, as they were last year. So it's really a great thing to do if you can do it. Jill: Mandy, thanks so much. Mandy: Sure. Jill: And thanks for watching.