A reader recently asked me for advice about charitable giving. As many of us donate at this time of year, it’s a timely question, and I do have some thoughts to share.
How do you ensure your hard-earned money is used effectively and efficiently by charities? One way is to check their financial statements. Canadians gave $13 billion to charities and not-for-profits in 2013, according to Statistics Canada’s General Social Survey; 47 per cent of donations were from those of us 55 and over. And all that money must be accounted for.
An organization’s balance sheet will show the net result of its operations to date, either a surplus or deficit, depending on whether funding has exceeded or lagged spending. Organizations with a large surplus may not need your support; those with a large deficit may use your funds to cover outstanding bills. A large deficit can also indicate an organization has not been run well.
An income statement will show spending by expense type (salaries, rent and travel, for instance) but it’s generally more informative to look at spending by activity. Look for a separate statement or graph that shows this breakdown. For example, a health charity may spend money on research, patient support, fundraising and administration. The relative spending on each category may influence your decision to donate.
Whether an organization publishes financial results is a good test of its transparency, but if the thought of digging into the numbers makes your palms sweat, there is help. Organizations like Charity Intelligence provide ratings (though mostly of larger charities) while Smart Giving’s website has tips and insights to help you give wisely.
A key factor to consider is how much organizations receive from other sources, such as government grants, fundraising events and other donors. Religious organizations receive the biggest slice of the donation pie (41 per cent) followed by health charities other than hospitals, which receive 13 per cent. Environmental charities take home just two per cent and social justice organizations (those involved in advocacy, law and politics) receive only one per cent.
So, if you are equally keen to support a health and a social justice organization, you can steer more of your funding to the social justice organization, knowing that the health organization is already taking in significant funding from other donors and sources.
Another way to increase the impact of your donations is to support organizations serving less popular causes. Sick kids’ hospitals and SPCAs generally have a far easier time raising money than organizations that cater to older or marginalized populations.
You’re likely familiar with the large organizations, but the smaller ones often deserve support, too. While large organizations can carry out large projects, small ones are often adept at stretching your donation dollars; dollar for dollar, you’ll make a bigger impact at a smaller organization.
I have worked for both large and small charities. At the large ones, a donation of $100,000 or more barely raised an eyebrow; at a smaller charity, a $10,000 donation would prompt all six staff members to break out our disco ball and celebrate.
The best charity to donate to may not be a charity at all. With current restrictions on advocacy and lobbying, not-for-profit organizations are often your best bet to make systemic changes. To overcome the psychological barrier of donating without a tax receipt, you can simply reduce your gift enough to compensate for the tax loss.
A word of caution: Make sure your chosen charity aligns with your values. Many social service organizations have a religious affiliation, and they’re not always up front about it. An organization providing food for the homeless may require diners to pray before eating (I’m looking at you, Salvation Army). A hospital or hospice may refuse to allow patients to exercise their right to an assisted death and an international aid organization may be as keen to evangelize as it is to help aid recipients (World Vision is a case in point). If this doesn’t align with your values, steer your donation dollars elsewhere.
Finally, if you are donating this holiday season, consider supporting our advocacy work at CARP. While we are not a registered charity, we promise to use every dollar to improve health and financial security of older Canadians and fight ageism. Go to donate.carp.ca to make a contribution or learn more.
Grey Matters is a weekly column by Wanda Morris, the VP of Advocacy for CARP, a 300,000 member national, non-partisan, non-profit organization that advocates for financial security, improved health-care for Canadians as we age. Missed a week? Past columns by Wanda and other key CARP contributors can be found at carp.ca/blogs.