When choosing an HIV charity to support, it’s important to always follow your heart. But at the same time, it’s vital you don’t let less-than-scrupulous organizations take advantage of that goodwill. And, unfortunately, it does happen—more often than one might think.
In 2018, the Federal Trade Commission (FTC) reported receiving 1.4 million fraud complaints through their Consumer Sentinel System, including over 535,000 imposter scam reports.
Ultimately, you want to feel good about where you’re donating your hard-earned cash, and be assured that the money is going where it is meant to be going. In order to do this, you need to know as much about the charity as possible.
Here are just a few tips on how to best accomplish this.
Make Sure They Are Who They Say They Are
If you aren’t familiar with the charity, be sure to confirm the organization’s 501(c) tax exemption status. You can do so by either performing an online search at the Internal Revenue Services’ Exempt Organizations Select Check finder or by calling the IRS toll-free at 1-877-829-5500. If you choose to donate to a non-exempt charity, it’s generally difficult to confirm how your donation dollar being spent (and, more importantly, your donation will not be tax deductible).
Follow the Numbers
Failing to ensure financial transparency is simply a deal-breaker. The gold standard practice for any charitable organization today should be to post their 990 tax returns on their website. Although an annual report is perfectly fine, they are ultimately tinged with a certain self-promotion. For our part, we’d rather check the numbers ourselves, plain and simple.
Do the Math
If the 990 tax return is available, take a quick look at Part VII - Compensation of Officers, Directors and Trustees, but give particular attention to the Part IX - Statement of Functional Expenses. Here, it’s important to compare column B (Program Services Expenses) with columns C and D ( Management and General Expenses and Fundraising Expenses). This will provide you better insight as to what percentage of your money is being spent on actual programs, and allow you to ask questions if the figures seem in any way “off.” (Here is a good example of a charity’s 990 tax return).
Be Wary If a Charity Spends Less Than 50% of Its Cash Budget on Programs
For our part, we tend to aim for charities that spend greater than 70%. Some might argue that this approach is far too simplistic, particularly since some charities need to spend more on fundraising than others. That said, if fundraising fails to exponentially increase program spending, then it’s only fair to scrutinize the fiscal management of the charity.
Don’t Judge by Numbers Alone
A smaller community-based organization, which is often more effective at a grassroots level, can’t necessarily be held the same financial standards as a national organization with annual donations in excess of $10 million. Set your fiscal bottom line, but base your judgment on what you know and/or personally experience with that organization. This will better ensure your long-term support, benefiting both you and the charity. If in doubt, you can always designate how your donation is to be spent—whether it be used for specific programs, scholarships, capital campaigns, etc.
Use Online Watchdogs
While they shouldn’t necessarily be the end-all resource when deciding which charity to choose, online watchdogs like CharityNavigator, CharityWatch, and GiveWell do provide telling insights that can help guide your decision (while offering fascinatingly different viewpoints on what constitutes a worthy charity).
Be Wary If an Organization Claims Greater Than 95% of Donations Go to Programs
Sometimes these claims are simply fundraising “spins” that are, in no way, meant to mislead. After all, 99% sounds far more impressive than 79%, right? But, oftentimes, these calculations are askew and include such non-budgetary items as cash held in reserve for future utilization. To our mind, 79% spent on programs sounds pretty good, and only three HIV charities that we know of have ever even approached the platinum standard of 95%.
Don’t Get Star-Struck
While star participation is often vital in drawing attention to and raising funds for a charity, you shouldn’t let endorsements be the start and end point of your decision making. For every star-driven charity that does exemplary work—like the Elton John Foundation, Sharon Stone with amfAR, Rihanna and John Legend—there are nearly as many that have either underperformed or closed their doors in controversy. Don’t let star power prevent you from asking the tough questions.
Don’t Allow Yourself to Be Rushed
Always be wary if a charity approaches you during a much-hyped news event or claims to be nearing the end of a fundraising drive. There is no time of the year when a charity won’t accept your money, so there’s no need to rush. Legitimate charities never pressure potential donors (although their fundraisers sometimes do). In the event you are being aggressively pushed for a donation by a telemarketer, consider blocking the calls at the National Do Not Call Registry.
Never Give Cash
Always demand a receipt. And never, ever reply to a blind solicitation, online or telephonic, that requests credit card information, bank details, or any other personal information whatsoever.
