Sponsored By – DonorsTrust
With more than one million registered charities in the United States, keeping tabs on who really moves the needle takes work. Beyond that, how do you know if the organization does principled work? Are organizations you support aligned with your free-market, limited government principles, or are your dollars actively working against your own goals?
Let’s look at four questions to ask to help you assess if a non-profit organization is working in line with your principles.
How much government money does the charity take?
Our grants team looks to this as one of the first elements of our internal assessment of groups. Organizations must list the source of their revenues on the 990 tax forms they file with the IRS each year. It’s all there on page 9 of the form – a breakdown of revenue from government grants, membership dues, event revenue, federated campaigns, related organizations, and “all other contributions,” which is where you find a sum of individual, foundation, and corporate giving.
Many liberty-minded donors would ideally see that government line at zero. For DonorsTrust, anything more than 25% of total revenues among non-policy organizations becomes a red flag for us. We provide some leeway given that often we are making grants to groups that are part of public universities, medical research centers, or local social service groups where it may not always be practical or possible to see a “zero” next to that line.
Similarly, you need to determine for yourself what your threshold for government revenue might be.
Does the charity support or work against your principles?
Policy, citizen education, and activism organizations generally wear their principles on their sleeve. With just a bit of sleuthing on an organization’s website you can generally figure out if it matches your principles. You often won’t have to scroll down far on the homepage to figure it out!
Determining an ideological match with groups outside the policy sphere can be more challenging. In some cases, it might not matter. If you want to support a local jobs changing program, do the politics of the staff matter as long as the organization is aiming at a mission that aligns with your own (and ideally doing it without government funding – or, more importantly, not actively seeking government funding)?
With non-policy groups, watch whether the organization puts out statements that encourage more government interference or intrusion in others’ lives. If the group stays quiet on such things and focuses fully on your shared goals, you’re probably ok continuing to give. We like to ask: “if this organization succeeds in its mission, does government grow in scope or scale as a result?”
Are the charities operations guided by its principles?
Among non-policy groups, a level up from the organization that is benign or neutral on free-market principles are those groups that have a mission that draws upon those principles. These might be human services group that explicitly exist as an alternative to government and actively seek to move people away from government programs and toward individual empowerment. These are groups such as Better Together in Florida or Georgia Center for Opportunity.
How do you figure out if a group abides by these ideas? Often you’ll learn about such groups through word-of-mouth from other donors. Read the mission statements/about us pages and look for clear clues that the organization sees private action as more valuable than government intrusion.
Is the charity effective?
Determining the efficacy of an organization can be tricky. Every organization’s website will tout its own effectiveness and success (or at least it should!). The question becomes whether that assessment is based on the right metrics. Any organization that does not at least try to measure its success should be judged negatively.
The first step is understanding what success looks like in your own mind. If you support an art gallery because you believe it should exist in the neighborhood, then its continued existence in that location may be enough of a measure of success. If you support that same gallery because you want to see school children increase their art appreciation, then it is important the gallery indicate, for example, how many school field trips prioritize that museum. Is that a goal the gallery also shares? If not, you might find another place to put your donation. If it is, watch for reports sharing how that metric changes over time. Can’t find it? Ask!
Measuring effectiveness in philanthropy starts and ends in the donor’s mind. As a donor, have a clear picture of what you want to achieve. From there, you can seek out organizations making a difference in that area.
Savvy donors don’t stop there, though – they continue to understand how an organization does its work to make sure it stays principled, mission-oriented, and effective. When organizations fail to meet those goals, principled donors should look to deploy their charitable resources elsewhere.
Many savvy, principled donors use DonorsTrust to aid this process. At DonorsTrust, we support liberty-minded donors by serving as a check on the organizations a donor wants to support. Every grantee gets vetted by our grants team to ensure it isn’t taking significant government money and that there are no red flags regarding mission or operations. When there are issues or concerns, we share that information back. That allows donors to give wisely and ensure their charitable dollar is spent as effectively as possible.
Peter Lipsett is a Vice President at DonorsTrust, a mission-driven donor-advised fund based in Alexandria, Virginia. Article reprinted with permission.