How to Vet Charities: Before You Donate, Make Sure You Know Where Your Money Is Going

There was a terrible earthquake in Nepal and you want to help. But there are a few things you should check before getting out your credit card.
Publish date:
April 28, 2015
charity, earthquake, charities

Over the weekend, Nepal experienced a catastrophic earthquake centered just outside the nation's capital, Kathmandu. The death toll as of Monday morning US time was 3,700 and rising, and the country has lost countless cultural artifacts. The situation in Nepal is dire, and charities from all over the world along with NGOs and agencies like the UN and DMORT are preparing to provide aid. Some are already on the ground thanks to rapid deployment programs and local staffing.

The people of Nepal are dealing with constant aftershocks, emotional stress, and interruptions to basic needs including health care and access to food. With most of us being so far away and witnessing so much suffering through the news, our first instinct is to help.

But before you make your charity donation, it's advisable to make absolutely sure that you know where your money is going, and that you're comfortable with how it's going to be used. That's why it's important to vet charities, and to understand what charities need to make sure they can offer the most efficient and effective help to people dealing with the aftermath of natural disasters and other terrible events.

1) Charities need money, not in-kind donations.

I already see buckets set up at my grocery store, bedecked in prayer flags, asking people to "give what they can for Nepal." Charities don't need your canned food, old clothes, medicine, or anything else, unless they're explicitly requesting these kinds of donations. As institutions, they can negotiate excellent deals on these kinds of things, and they can process and deliver them much more efficiently when they purchase them in lots. Processing endless small in-kind donations eats up a lot of time and energy. It's also important to be aware that things like clothes are likely not going to be sent to victims. They're going to go to clothing recyclers that buy by the pound so the charity can apply the funds to its work.

The exception to this rule is highly valuable in-kind donations (think works of art) that can be auctioned or sold to raise significant funds. Likewise, a locally-based charity might benefit from a vehicle donation to provide services more efficiently. In general, small items aren't useful, but large ones often are — always ask first.

A particularly important example of this comes up during annual food drives around the winter holidays. If you buy a can of pumpkin for $1.29 and drop it in the food bank's collection barrel, that's nice, but the food bank can actually buy canned pumpkin in bulk for less than half that price, typically. Thus, you'd actually be better off donating your $1.29 directly to the food bank, except that processing donations that small is inefficient. So a better solution involves pooling resources at the office, with your families, or with your friends, to turn $1.29 into $129 or more. The food bank needs your money more than they need your food.

2) Charities prefer unrestricted donations

While earmarking seems intuitive — you want to make sure money is used for a specific crisis — it can actually be a problem for a charity. A classic case came up with Doctors Without Borders and many other charities at the height of the Ebola crisis, when so many donors were earmarking that the charity was forced to put a stop to earmarked Ebola donations because so many of its services in other crisis zones around the world were suffering from funding shortfalls. If another flood of funding comes in and it's earmarked for Nepal, Doctors Without Borders and other charities can't fund their services in regions like West Africa (yes, Ebola is still a problem) and other regions of the world.

Your unrestricted donations in the coming weeks might go to direct service in Nepal, but they might end up somewhere else, too. And that's okay, because people around the world need help and services — and when Nepal has faded from the charitable donations radar but people still need help, future unrestricted donations will make their way to Nepal. What goes around comes around.

Knowing what charities want, how do you choose which charities to give to, given that so many are asking for funds to help their work in Nepal?

1) Check with Charity Navigator, the Better Business Bureau, Guidestar, and Charity Watch

These organizations all make it their business to rate charities. They comb through annual reports, IRS filings, and other supporting materials to take a look at how charities use funds, and assign ratings on the basis of this information. One key question for ratings organizations is how much money goes to administration, fundraising, and public relations, which is something you should consider as well. How comfortable do you feel with the idea of 50 percent of your donation going to administrative costs? Or with donating to a charity where chief officers pull in six or seven figure salaries? You can find this information at charity ratings organizations.

It's also worth a quick amble over to the IRS website to confirm that a charity actually is tax-exempt, because if it's not, or it's lost that status, that may be a red flag. You may also want to look at the Center for Investigative Reporting's 50 Worst Charities, a chilling list of the dirtiest groups in the very large and potentially very profitable industry of doing good.

2) What kinds of services does a charity offer?

Some focus on direct services. Habitat for Humanity, for example, builds houses. That's what they do, and they do it extremely well. Other organizations are more focused on research or lobbying. In the case of choosing charities for working in Nepal, you probably want to choose a direct service organization, like the Taiwan Tzu Chi Foundation, which is sending a 14-member medical team with more to follow. (Incidentally, Tzu Chi is almost entirely volunteer-run, and operates on the principle of Buddhist direct service; you can read more about their work here.)

3) Is the charity affiliated with a cause or organization that you're uncomfortable with?

It might seem petty to refuse to donate to a charity on the basis of its associations, but you have the right to decide where your money is going, and you have many alternatives to choose from. Not donating to a charity on the basis of concerns about its ethical practices doesn't mean you're not going to donate at all — it just means that you're going to pick a different charity.

For example, you may opt to avoid donating to the Red Cross/Red Crescent or the Salvation Army due to their discriminatory practices (it's important to note that the Red Cross ban on gay donors is true of all blood banks that want to comply with federal law, but the Red Cross was also a leader in instituting and lobbying for that ban long after research established that gay men are perfectly capable of donating blood without endangering the blood supply). Some Christian charities only serve Christian populations, or force people to listen to sermons or copy Bible verses before offering assistance.

Conversely, you can also specifically seek out a charity aligned with your faith or personal beliefs. For example, if you're Buddhist, you might prefer to donate through a Buddhist charity.

4) Google can be surprisingly informative

When I'm making decisions about where to donate, sometimes one of the easiest ways to check on a charity involves these keywords: the charity's name, and "controversy." This can turn up a quick thumbnail view of past and current controversies and problems with a given charity, as well as information on how that charity responded to public concerns. Make sure to evaluate these sources carefully: They should be reputable and should rely on actual facts.

5) How quickly can a charity dispatch relief teams?

This is a question with complicated implications. Some charities deploy extremely rapidly, and stay in a country over coming weeks and months to provide ongoing support until the situation is stabilized. Some charities deploy more slowly, but they provide long-term assistance. If you're concerned about when a charity will actually arrive on site, and what it will do, hit up its website for information about how it's responding to the Nepal crisis. Mercy Corps, for example, already has 90 people in Nepal, many of whom are local — an added bonus to local staffers is that they know the language and are familiar with the communities where they work, so they have an established, trusting relationship that can help break down barriers and get aid to desperate communities quickly.

6) Watch out for ringers

Some unscrupulous charities try to piggyback off the reputations of those that are better known. They may use very similar names, so take the time to research carefully and confirm that you're actually donating to the right charity. While you're at it, help yourself out and donate directly. A percentage of solicited donations actually go to the fundraiser, not the charity itself, and donating directly ensures that your funds are going where you want them to go — solicitations over the phone or on the street can also be a scam, which means none of your money will go to charity!

Speaking of which, if you do spot or suspect a scam, report it to law enforcement so they can follow up. Fraud is extremely common after major disasters, so don't fall prey to it.

I'm donating to Doctors Without Borders and Taiwan Tzu Chi, on the basis of their stellar record of direct service and rapid deployment to areas in crisis.

If you are concerned about a missing person in Nepal or have information about someone who is missing, take advantage of Google's Person Finder. Please be aware that embassies in Nepal as well as Nepalese embassies abroad are overwhelmed with requests and crisis management right now and may be unable to return requests for nonessential assistance.