After making a donation, I am often left wondering, “Where does my donation go?”
To satisfy my curiosity, with today’s wonderful internet access, I decided to do some research on a few of the organizations I have opened my wallet to. Well, my eyes were opened. The old me was a donor who contributed indiscriminately, then, after the fact, after the donation was made, wondered about the organization’s objectives. Where did my money go? And how much of what I donated actually made it to feed the starving people across the globe.
An informed donor is the new me: a donor who does research, asks many questions, and is sure that the organization is the right place to make my money do the most good. Becoming an informed donor requires more than what is listed here (subscribe to our newsletter to find out what’s missing!), but these 3 steps will explain why you must become an informed donor.
3 STEPS TO BECOMING AN INFORMED DONOR
1. The first step in becoming an informed donor is to understand there are various forms of donations and a variety of ways the donation is used by the organization.
The “general donation” is the type of gift most donors are familiar with. These donations are typically made through the mail or online. General donations are very important to nonprofits since the organization can use the contributions in pretty much any way they want, including marketing, operating costs including salaries, and research. So this is where my worry about how much of my donated dollar actually goes to feed starving people meets reality.
If a potential donor would rather help an organization's specific project, they can create specifications for their donation. The organization should ethically adhere to these terms if they are able to.
Another way to specify a donations use is through an endowment fund. Endowments often allow the donor to designate their gift, so the benefactor knows exactly where their donation is going, while also securing the future for a nonprofit forever. Donors may also consider third parties, like community foundations, as another way to make a donation specified for a specific use. Community foundations allow any donor, big or small, to ensure the future of nonprofit organizations through endowments.
2. The next step in becoming an informed donor is to research the organization to see where donations and grants are being spent.. Whether it’s a public or private nonprofit, the organization’s tax information is public record. Take a peek around Guidestar for information on IRS-registered nonprofit organizations. Tax-exempt nonprofits should also submit a form 990, which provides information on the filing organization’s mission, programs, and finances.
3. Lastly, an informed donor may want to become well acquainted with a particular nonprofit’s culture. One way to do this is to follow the organization on their social networks. Many nonprofits post content, such as images, videos, and statuses that allow donors to see how donations are being used.
Do you think you’re a general donor or an informed donor? Let us know in the comments or Tweet us @_foreverfunds.
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