Charities can play a significant role in accomplishing a church’s local outreach goals. The relationship should be more like a partnership, so the evaluation process should be thorough…
People want to give to charities. Charity Navigator reports that charitable giving exceeds $400 billion annually in the United States, and over two-thirds of that comes from contributions made by individuals.
But the trouble with giving to charities is in how to responsibly choose one that deserves your money:
Some of the main reasons why families and individuals donate to charity are a passion for a cause, a desire to give back, and a wish to make a positive impact on the world. While many donors have a connection to the non-profit organizations that they support and are confident that their generous contributions will be put to good use, some donors are not sure how to evaluate charities and are unsure where to turn for help.
The American Endowment Foundation provides 10 steps individuals should take to properly evaluate a charity before making the decision to commit their money to them.
TEN ACTION STEPS TO INCLUDE IN A CHARITY REVIEW PLAN
Deacons can use this process to evaluate charities on behalf of their congregation members. The first step is to make sure the charity’s purpose aligns with yours:
1. Look at the charity’s mission and determine if this is important to the donor.
The beginning point of any organization or charity is its purpose, its mission. If a charity doesn’t clearly know what it is trying to accomplish, then it isn’t likely to develop systems and policies that are successful in achieving its purpose. More specific purposes are likely to result in a greater impact.
For example, one charity’s purpose might be to “Feed starving children in Africa.” Another’s might be “Feed starving children in Burundi.” The second charity has a more focused and, therefore, clearer purpose. They may be more motivated. The purpose should be clear, and it should be a cause your church is interested in supporting.
2. Look at the outcomes. For instance, how many people has the organization helped, and has that increased or decreased over time? Given the size and budget, is that number reasonable?
This is important. Your money, and the church’s money, should contribute to an organization that gets results. You don’t want to fund an organization that cannot prove to you what its impact is. No organization should receive any money if it cannot measure its impact. A worthy charity should have a means of measuring and quantifying its impact. If the purpose of the organization is to feed starving children, then it should be able to produce data and facts that show you exactly how many children it fed each year and how much it spent to achieve these results.
3. Review the financial information. Is it transparent and recent? Are the expenses in line with the budget? Has the budget increased or decreased in recent years? If applicable, how has it adjusted to a decrease in government funding. Look through the current Form 990 and also verify its tax-exempt status.
If an organization is not tracking and publishing its financial information on an annual basis, then it is either unorganized or trying to hide something. Once you have located the charity’s financial statements, there are certain financial ratios you can calculate to help determine how financially sound it is.
4. Talk or meet with the organization’s leadership if the donation is significant enough. Has there been much turnover of key staff members? How can the donation be best utilized? Who will be the primary contact person for the donor?
This is a time-intensive step. It is probably best to act on this after other steps have been completed that don’t require face-to-face communication once you’ve determined the charity has no red flags.
This is also why any diaconate that evaluates charities on behalf of its congregation members is providing them a tremendous service.
This takes a lot of time. One individual is time-limited in how many charities he can successfully and thoroughly evaluate. The church may also be able to gain an audience with the charity’s leadership where an individual would not. This is because the church is in a position to donate a lot more money than most single individuals. The charity may be willing to give the church a more attentive ear, given this fact. The deacons can then gain more accurate information than any individual could. More accurate information is a requirement for making better decisions.
When interviewing the leadership, ask them about the charity’s purpose. Any board member should have familiarized himself with the organization’s purpose, history, bylaws, annual successes, and the organization’s impact over time. Board members who aren’t familiar with this basic information may be asleep at the wheel, which doesn’t bode well for the organization’s long-term viability.
When interviewing the organization’s leadership, be sure to take notes. You should file them in a dossier you compile on the organization. You should plan to make this dossier available for any member to view who is curious. This will let them verify the information you have collected and give them confidence that you really have taken great pains to be as thorough as possible. This is important for building trust.
5. Identify who is on the board of directors. Are there many or few board members? Are they business or community leaders? Especially if a donor is considering joining a board, she or he should meet with some board members.
What is the motivation behind each board member’s decision to serve the charity? Why did they choose to serve this particular charity over others? What other charitable boards did they turn down, and why?
6. Evaluate the main supporters. Are there many funders or few? Have key funders been involved for some time? Does the donor know any supporters?
One red flag to be on the lookout here is for any sugar daddies that contribute a majority of the organization’s funding.
Any organization that has become too dependent on a single donor has most likely jeopardized its ability to accomplish its mission. That one donor has too much influence. The organization’s leadership will be tempted to compromise its purpose to avoid losing the donor’s support. In such a case, the rest of the donors may not be aware that the organization has effectively been “captured,” and their donations may not be serving the purpose they thought.
At the same time, the church should weigh very carefully whether it wants to make such a large contribution so as to become the new sugar daddy.
7. Discuss with the leadership how the donor can be most helpful in addition to financial contributions.
Money isn’t everything. Any in-kind donations, like clothes, food, or other tangible goods or services, that the diaconate could motivate congregation members to contribute would be a great win for everyone involved. Charities that allow for these kinds of contributions by church members might be a better fit for a church than those that just accept monetary donations. This is because church members can get personally involved. It can become a community project to rally around. This will make it more personal to the congregation.
Many private businesses adopt a charity. They persuade their employees to donate money, time, and labor. For example, some businesses contribute to Habitat for Humanity every year, which usually has a local branch. They may start small, setting a goal to fund a certain portion of a house each year. They designate certain “building” weekends and ask employees to sign up to help build the house. Over time, as the effort grows year after year, they may strive to build and fund an entire house.
The church, through the diaconate, can do something similar. The church can “adopt” a charity that it works with regularly. Small contributions in time and money made continually over time will compound into a significant impact over time.
8. Visit the organization if possible or volunteer to really get to know the people and quality of the work.
There’s nothing like walking a mile in the other person’s shoes to get a feel for what it’s really like from his perspective.
Same idea here.
Test driving a charity is a good idea. It would be a good idea to organize a group of church members. They can split up and serve over a series of three or four weekends, then come together and discuss their thoughts and findings. Did anyone notice anything strange? How are the staff? Is everyone honest and friendly? Did they feel good about the work they were doing and the impact they were having? One of the deacons should compile these notes into a report that goes in the charity’s church file.
9. Determine that the organization has a very good reputation.
Charities can minimise the risks associated with negative publicity and promote accountability by:
* being transparent about their use of donation funds;
* keeping proper accounting records of how funds are managed;
* including summaries of annual financial statements and reports on the charity’s website; and
* having proper staff policies and employee management practices in place, to ensure employment and staff matters are properly handled.
Charities are strongly advised to ensure they have proper record-keeping and reporting practices and management systems in place. If necessary, external professional financial and legal advice should be sought.
Does the organization get any bad press? Has it in the past? If so, is there any evidence that it rectified the problem? Has it gotten any good press? Accusations of mismanaging funds or refusals to produce financial information are red flags.
10. Feel confident that contributions and efforts will be appreciated and utilized effectively and efficiently.
Churches and individuals can have a larger impact on smaller organizations. Many local charities are smaller organizations, and they are likely to feel and express more gratitude for your support than any large national charity will.
Habitat for Humanity provides opportunities for the volunteers to meet the families they are helping. This is a good way to evaluate how appreciative the recipients of the charity are.
Today, many individuals give to charities. But to really evaluate a charity properly, it takes a serious investment of time, as the above process reveals.
A better approach is for individuals to tithe to their churches, then let the deacons evaluate and contribute to charities on their behalf. Or else start their own. The church is in a position to provide hope for the poor and needy. Only the church, through the healing power of Jesus Christ, can offer salvation from sins and a path out of miserable, earthly poverty. The two go hand-in-hand. Poverty doesn’t have to be permanent.
The deacons have an opportunity to provide a real service to society, to God’s kingdom, and to the congregation members they serve.
Because of their positions of local influence and sources of wealth, the deacons are in better positions than individuals in gaining time with the charity’s leadership. Interviewing the leadership will lead to better information, confidence, and trust. This can lead to fruitful partnerships.
It is a good idea for churches to find a local charity to adopt. It could adopt more than one to serve different purposes and the different skills and talents of church members, but it probably can’t successfully adopt more than two or three at a time. Adopting a charity is not a decision to be made lightly. Jesus warned: count the cost (Luke 14:28). Once it adopts a charity, the church is committed to investing in this charity over time. Organize routine weekend service trips or fundraising activities regularly.
All information that a diaconate compiles on the charities it investigates should be saved to an accessible location. It would be best to put this online for any member to be able to access at any time. Google Drive is a good free way to do this.
Once a diaconate has gained experience implementing this process to evaluate charities, it can teach free weekend seminars for anyone in the community who also wants to learn this invaluable skill.