Eight Great Tips For Being A Savvy Donor

Don't give a knee-jerk reaction or respond to the first organization that appeals to you for help. Take the time to identify the causes that are most important to you and your family, and be specific about the change you want to effect. For example, don't just support generic cancer charities, but ones that have targeted goals—such as providing mammograms to at-risk women.

Never give out personal information (credit card details, social security numbers) over the phone. And be aware, for-profit fundraisers primarily used in charitable telemarketing campaigns keep 25 to 95 cents of every dollar they collect. If you like what you hear in the pitch, hang up, investigate the charity online, and send your contribution directly to the organization, thereby cutting out the middleman and ensuring 100 percent of your donation reaches the charity.

Don't drop money into canisters at the checkout counter or hand over cash to solicitors outside the department store. Situations like these are ripe for scam artists who wish to take advantage of your goodwill. If for no other reason than wanting the tax deduction, only support charities granted tax-exempt status; in the United States such charities are called “501(c) (3),” referring to their status under the Internal Revenue Code; in the UK they are called “505(1) (a). Also make sure the charity has a donor privacy policy whereby the organization promises never to sell or trade your contact information. In the majority of cases, the onus is on the donor to opt-out of having their personal information shared with other entities.

The financial health of a charity is a strong indicator of its performance. The most efficient charities spend at least 75 percent of their budget on programs and services, and less than 25 percent on fundraising and administrative fees. The charity's ability to sustain its programs over time is just as important as its day-to-day spending practices. Wise donors also seek out charities that grow their revenue at least at the rate of inflation, continue to invest in programs and have money saved for a rainy day.

Charities need to pay their top executives a competitive salary in order to attract and retain the kind of talent needed to run a multi-million-dollar organization—and produce results. Charity Navigator reports the average CEO compensation of a charity is roughly $140,000, although salaries tend to be higher in arts and education charities. Put salary in context by examining the overall performance of the organization. It's much 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.

It takes some effort to assess a charity's program impact, but donors who are committed to advancing real change believe that it is worth their time. Before making a contribution, talk with the charity to learn about its accomplishments, goals and challenges—and be prepared to walk away from any that are unable or unwilling to participate in this type of conversation.

Spreading your money among multiple organizations not only results in your mail box filling up with more appeals, but also diminishes the possibility of any of those charities bringing about substantive change as each one is wasting a large percentage of your gift on fundraising and overhead expenses.

Smart donors support their favorite charities for the long haul, seeing themselves as a partner in the charity's efforts to bring about change. They know that only with long-term, committed supporters can a charity be successful. Tell the charity of your giving plans so it knows it can rely on your donations, and doesn't have to waste resources by sending numerous solicitations.