Harris: Consumer protection: Vetting charitable organizations

By Charlestien Harris

Hurricanes, tornadoes, floods, and natural disasters are a fact of nature. During these times of need, many of us want to give donations to help others navigate the difficult road to recovery. Often, nonprofits, charities, and other organizations solicit donations to help them carry out their mission to assist those in need. However, some organizations are not reputable and will stop at nothing to get your hard-earned money with deception as their primary intention.

Vetting is the thorough investigation of a nonprofit or charitable organization that a funder conducts before deciding to support it financially. Vetting also gives a funder a glimpse into an organization’s mission and values, financial health, organizational structure, and the effectiveness of its programs. Below are a few steps you can take to ensure your money is going to the right organization and is being used for the specific purpose you intended.

1. Find out the mission and decide if it aligns with your purpose for giving. An organization’s mission provides a potential funder with a clear and concise statement that explains the organization’s purpose, goals, and how it intends to achieve those goals. You should ask yourself: Does the mission align with my goals and values? Will the money be spent for my intended purposes? Consider if this is the best way to accomplish the reason you want to support them financially.
2. Make sure your money is actually going to the cause. Administrative costs are unavoidable and sometimes necessary for an organization to function and carry out its mission. Check to see how much of the money given is actually benefiting the cause and if it is being used properly within the organization. All legitimate charities should be properly registered with a governmental agency if they are going to receive your donations. A great way to ensure that a charity is not a scam is by checking the registration and tax status of the charity or nonprofit you intend to support.
3. Evaluate the charity or nonprofit for financial transparency. When evaluating an organization, there are financial documents you can look for to ensure they are truly transparent about their finances. These organizations are required by law to complete certain tax forms, like the IRS Form 990. Finding this document can be tricky, but with a little effort, you should be able to locate it. Once you find an organization’s 990, you will be able to see the salaries of officers, directors, trustees, and managers. You can visit the Mississippi Secretary of State’s webpage to search for legitimate charities in Mississippi. Most states have a registry for charities, and you can start your search there.
4. Contact the charity directly. Sometimes the best way to find out information about a charity or nonprofit is by contacting it directly. By talking to real people who have dealt with a specific charity, you should be able to tell immediately if their way of doing business aligns with your values. Staff or volunteers at any legitimate organization should be more than happy to answer any questions or provide you with printed material containing vital information about the charity or nonprofit. You can also check their webpage, Facebook, Twitter, and other social media outlets for additional information about the organization.
5. Watch out for red flags! With every good organization or charity, there are some bad ones. Here are some red flags to pay attention to:

• High-pressure tactics: You should never feel pressured to give any money or time to an organization for any reason.
• Exaggerated claims: If it sounds too good to be true, it usually is. Watch out for wild or sweeping claims of totally handling all issues they may face.
• No clear mission: Any charity or nonprofit worth your time or money will have an established purpose for existing and operating.
• Unusual giving methods: Be wary of organizations that only accept donations through gift card purchases, wire transfers, or other methods that don’t make sense.

Giving financially in a time of need is a natural response. It is okay to have a generous spirit of giving, whether it be through time, money, or simply helping out a person in need. Before making donations to any charity or nonprofit, take some time to research exactly how your money will be used. This financial move may ensure your donation and giving efforts have the greatest impact.

For more information on this and other financial topics, you can email me at Charlestien.Harris@banksouthern.com or call me at 662-624-5776. You can also visit www.banksouthern.com/blog for other articles related to finances. 

Until next week – stay financially fit!

Charlestien Harris is our financial contributor, a financial expert with Southern Bancorp Community Partners whose articles are seen in a number of publications around the region.