Experts Advise Treating Charitable Donations Like Investments

November 21, 2017

From flooding in Texas to Puerto Rico’s struggle to recover after Hurricane Maria, we’ve taken a look at the economic impacts of several natural disasters over the last few months. Whenever we write posts like these, we always include a link to a list of organizations you can donate to if you feel so inclined. Along with spreading awareness, we also want to make sure our readers have access to a reliable selection of charitable options vetted by journalists. Unfortunately, not every organization that pops up in the wake of a disaster has the same philanthropic intentions. 

That’s why experts on charitable giving stress the importance of finding out exactly who you are donating to before writing any checks. “Do your research,” said Stacy Palmer, editor of The Chronicle of Philanthropy. “Our natural inclination is to say, ‘What can I do?’ and reach for our wallets. That’s the time to pause and do a few minutes of research and really make sure that the organization is doing the work you’re interested in.” In order to figure out which group aligns best with your concerns, look first at an organization’s stated mission and how they have tried to fulfill their goals over the years. A charity that lacks a clear vision or doesn’t mention the results of its work might not be worth your money.

What’s more, you may want to spread your donations among several different groups rather than commit to a single organization. Large charities, for instance, can’t solve every problem the comes up in a crisis even with their teams of knowledgeable volunteers and staff. That’s why you should also find and support smaller organizations that do the work their bigger counterparts can’t. Experts liken it to maintaining a diverse financial portfolio: along with investing in reliable blue-chip companies, you also put money into small but promising startups. This will ensure that your cash ends up in the hands that need it, giving you a clear conscience and sense of accomplishment that can only come with helping other people. “Giving should feel good,” said Shannon McCracken, chief development officer for the watchdog group Charity Navigator. (Here’s a list from Charity Navigator of highly-rated organizations who are still doing relief work in Puerto Rico.)

Questions:

  1. Why should you do some research before giving money to a charitable organization?
  2. What are the benefits of treating charitable donations like business investments?

Source: John Hanc, “Want to Help? Do Your Research Before You Donate,” The New York Times, November 6, 2017.

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