With only a couple of days remaining in 2010, many charities are going on a last-minute drive to entice donors to give. But Canadians should still do some homework about charities before parting with their cash to gain a tax deduction.
Leanne McConnachie, director of farm programs at the Vancouver Humane Society, suggested there are four key areas of a charity that donors should look at to make the most of their donation, based on a thesis she completed in 2007.
The most basic is an organization’s values, beliefs and policy statements on key issues. Potential donors should also be looking for evidence a charity is effectively addressing a community need and proof in an annual report of a strategic plan, credible financial statements and a diversity of funding sources.
“If you’re doing a small donation, you’re probably not going to call up the organization, but these are some easy things you can do by looking on their websites,” said McConnachie.
Donors thinking of making monthly donations, or large donations, should look for any potential red flags with an organization itself. Evidence of excessive turnover of personnel, disproportionate salaries of management, high administration or fundraising costs or even a lack of transparency, all might suggest issues with the charity’s organizational culture.
Lastly, donors should also look at a charity’s people, including an organization’s management, board, donors and paid staff.
“If the same position turns over and over, sometimes it’s because of low pay. If you’re a significant donor, you might want to ask questions, because you have to know what’s happening behind the scenes.
“When you’re looking for employment, or investing, you generally read about the company, but somehow when it comes to donations, people say, ‘Well, I’m just doing something nice,’” said McConnachie. “That’s when people tend to not spend their time asking themselves those same questions.”
More details about issues affecting donors and charities are in Business In Vancouver’s Top 100 Charities issue. (See “Giving choices, measuring impact” – issue 1102; December 7-13.)