Donating to charity has many benefits. This act can help with taxes, boost a cause or community, and actually improves personal happiness! According to a recent research paper partnered between Harvard Business School, Simon Fraser University and the University of British Columbia, spending money on other people, also called “prosocial spending”, can increase happiness. Knowing which charity to donate to, however, can be a daunting task. There are many out there, and not all of them use the money they receive wisely. Two historical misuses are using donated funds to overpay executives, and spending more dollars on marketing than aid. So how do you ensure your donations go where they should?

Questions to Ask

Aligning with a charity or nonprofit begins with understanding your values and ethics. Understanding what is important to you and where you want to see change can highlight, plus eliminate, organizations immediately. When several prospects emerge, asking questions is key. Some useful questions are:

1. Is clear information available about the impact of the organization’s work?
   1. News reports, testimonials, articles which speak of the good done are all helpful, especially when not directly connected to the group’s own website.
2. What is the status of the Form 990 with the IRS?
   1. This is to check finances. Any organization with tax-exempt status taking in over $50,000 per year has to file a Form 990. The annual report shows how a nonprofit spends its money.
3. Is the website secure and up to date?
   1. Security is very important, especially when donations are accepted online. Having a current site also indicates consideration of current events within the community.
4. Are donations tax deductible?
   1. Utilize the IRS’s Tax Exempt Organization Search if info is not readily available.
5. Is there anything about the nonprofit which concerns you?
   1. Trust your gut. Do you mind if there are political or regional affiliations? What is the public perception of the group?

There are several sites on the internet which take the work out of digging into the infrastructure of charitable organizations, like their financials, leadership, and acts. One example is Charity Navigator, which provides free access to information regarding 225,000 charities. Charity Navigator is also a nonprofit, and receives funds from individuals, foundations, and corporations in order to keep ratings objective. GuideStar, under the nonprofit Candid, maintains a database of organizations and the detailed information of each group. Finally, the Better Business Bureau is one of these charity watchdogs as well. By reviewing each of the chosen public charities according to their 20 Standards for Charity Accountability, donors can get a clear picture of responsible practices. These trusted charity rating organizations are the most reliable throughout the industry.

How Houston Habitat Ranks

For the sake of full transparency, let’s look at our own reviews. Houston Habitat for Humanity has been a part of Charity Navigator’s rankings since 2005. The report is based on Accountability & Finance, Culture & Community, and Leadership & Adaptability. Currently, we are a Four-Star Charity, scoring 100%, and noted as an organization to which “you can give with confidence.” This site gives quick, to-the-point metrics and scores.

With GuideStar/Candid, Houston Habitat is a recipient of the Platinum Seal. If you love to review numbers, this is the site for you! Informational graphs show revenue vs. expenses, assets & liabilities, and business model indicators. Further, organizational demographics are listed out such as race, ethnicity, gender identity, sexual orientation, and disability.

Better Business Bureau lists Houston Habitat for Humanity as an Accredited Charity, which is the highest available rating. Green marks are given for all categories, including no conflict of interest, providing detailed expense reports, having responded promptly to complaints, and reporting the results of effectiveness assessments. This site also shows when the charity report was issued and when it expires.

Looking for direct access to the financial statements, tax documents, and annual reports for Houston Habitat for Humanity? This link is found in this website under Who We Are, Financial Information. Additional information about how Houston Habitat for Humanity receives and distributes funds is noted in the blog post “How We Fund Our Mission”. Read it and other interesting articles.

Your Money, Your Choice

What makes a good charity? Only you can answer that question, because everyone holds different beliefs and causes near to their hearts. The tools mentioned above provide transparency and evaluations of organizations, but it is ultimately your decision about what mission speaks to you, what programs best benefit your community, and what fundraising methods align with your finances. Remember, your dollars are your votes for how you want society to be.

Found your charities and are ready to donate money? Keep these tips in mind:

• Donating by credit card or check is safest. Don’t pay with wire transfers or gift cards. If someone asks you to donate by wiring money like through Western Union and MoneyGram, or buying gift cards and sending them the codes, don’t do it. Scammers ask for payments this way because it’s harder to track. The same goes for donating with cryptocurrency. If only cryptocurrency such as Bitcoin, Ethereum, Tether, or USD Coin are accepted, it’s unlikely to be legitimate.
• If donating online, make sure the webpage where payment information is entered has “https” in the beginning of the web address. That indicates information is encrypted and transmitted securely, but is not completely foolproof as scammers know how to encrypt too.
• Be wary of sentimental claims with few details, such as helping wounded veterans who can’t work and families who can’t afford cancer treatments but without specific information about how donations are used.
• Winning a prize or contest in exchange for a donation is usually a trick.
• Donating on social media and crowdfunding sites can be authentic, just remember to only donate to people you know, and check the link to ensure the site is valid. Also, don’t assume a request is legitimate just because a friend posted it.

After you’ve completed your donation to a well-researched nonprofit of your choice, especially for the first time, keep an eye on your bank account and credit card statements for a while. Make sure you’re only charged the amount you agreed to donate ― and that you are not signed up to make recurring donations, unless you intended to establish this kind of giving. Also keep records of all donations for taxes. A dedicated folder within your email account can be helpful.

Your Generosity is Appreciated

Donations to Habitat for Humanity come in many forms! Some people donate online, while others prefer to mail checks. If your job offers a matching gift program, consider including Houston Habitat. Sponsorships, planned giving, stock gifting, and memorial gifts are greatly appreciated. If you are already a Walmart.com and Kroger shopper, these companies will donate a portion of your purchase to Houston Habitat. Round up your change then donate to Houston Habitat on Walmart.com, and link your Kroger Plus Card to Houston Habitat by visiting their online site and entering organization ID #80051. We welcome all forms of donations and work hard every day to ensure appropriate use.

Wherever you decide to give, on behalf of the nonprofit community, thank you for doing your research and giving to the most deserving of organizations! Your charitable giving has reaching impacts from one generation to the next.