Make Sure Your Charitable Donations Have the Impact You Want

By Brandon Miller, CFP–

The holiday season is in full swing, and so is charitable giving. In fact, 40% of charitable donations take place in the year’s final weeks. And I’m proud to say that our LGBTQ community donates a higher percentage of our incomes than the general population, showing that our voices—and values—matter.

If you’re feeling bighearted this year, you might want to check exactly where your contributions are going. The last thing that you want to do is to give to some charity that doesn’t support LGBTQ values.

So, what can you do to make sure your generosity has the impact you desire? Start by following these two steps:

1. Research the charity’s ranking.

While a heart-tugging mission is compelling, a nonprofit’s actions drive the organization’s operational health. Services like Charity Watch or Charity Navigator can provide information about a group’s financial stability, transparency, and more.

Some organizations look great in theory, but donate very little proceeds to their actual causes. Investigative reporting discovered that the 50 worst charities in the U.S. use less than 4% of their donations for actual cash aid. They also often use names that are very similar to other highly rated nonprofits in hopes of tricking donors.

Even if the nonprofit isn’t being deceptive, it may use its funds in ways that you may not agree with. For example, more than 6,000 charities pay for-profit organizations to gather donations for them. In other words, your donation could help to pay for the group to gather more donations, rather than actually giving back to the cause you care about.

So, before giving to a new nonprofit, explore its rating to make sure it is as charitable as it appears.

2. Make sure that the charity’s track record upholds your values.

After verifying the nonprofit’s legitimacy and rating, you can dig deeper to see what causes it really supports (beyond its stated mission). For example, what’s the organization’s approach to social progress?

If you’re giving to a highly rated LGBTQ–focused organization, such as the Human Rights Campaign, you can probably expect it to reflect your values. But how do you assess the values of smaller organizations whose mission has nothing to do with LGBTQ issues?

Some organizations, like the Girl Scouts, explicitly state their commitment to inclusivity and have returned donations that had discriminatory strings attached. Others are less overt in their stances or have more complicated histories, so you may need to research what they really stand for today.

The point is, whatever ideals matter to you should also matter to the organizations you support.

Ultimately, regardless of your passion or priority, taking a little time to research a nonprofit can help ensure that your money drives real progress.

Brandon Miller, CFP® is a financial consultant at Brio Financial Group in San Francisco, specializing in helping LGBT individuals and families plan and achieve their financial goals.