No matter how much or why you give to charities, you want your donations to make an impact.
With some 1.5 million charitable organizations across the country, it can be difficult to choose where and how to give for maximum impact.
What’s more, some commonly held misperceptions around giving can diminish our philanthropy.
To help us become more effective givers, we recently spoke with Anthony Petchel, Philanthropic Coach with 360Philanthropy, who shared valuable insight and tips for those interested in maximizing the impact of their philanthropic giving.
How can I learn more about a charity I’m interested in supporting?
Anthony Petchel: I suggest donors start with the nonprofit’s website and look for annual impact reports, program information, theory of change, blog posts, and financial reports.
GuideStar and Charity Navigator are great resources for looking up an organization’s IRS-990 forms and impact data.
Should I interview a nonprofit before donating?
Anthony Petchel: Nonprofits love to hear from donors. At a significant giving level, it’s entirely reasonable to want additional information such as impact reports, program data, or budget from a current or prospective nonprofit.
When asking for information, it’s important to recognize that as a donor, a power dynamic is at play when you engage with a nonprofit—you have resources and they have a need.
Given this, you may wish to ask yourself, “Is my request reasonable and appropriate for the size of the gift?”
If you have questions for a nonprofit, I recommend you first reach out to the development staff. For big-picture questions about the organization’s vision, mission, or strategy, they will often refer you to the Executive Director or CEO.
Do charities with the lowest overhead deliver more impact?
Anthony Petchel: Many people want 100% of their gift to go to programs, not salaries, which can feed the misperception that organizations with the lowest overhead have more impact.
In reality, impact happens when nonprofits hire skilled people to do the work. The work of a nonprofit doesn’t happen in a vacuum; it requires trained staff who need computers, health insurance, and more.
A recent study looked at arts organizations over ten years and found that organizations with the highest impact spent at least one-third of their budget on overhead.
Spending too little on overhead deprives nonprofits of the competitive salaries, staff training, and other resources they need for long-term success.
Shifting a mindset from “I want 100% of my donation to go to programs” to “100% of my donation supports the organization’s mission” is a better way to holistically support a nonprofit.
Can I define the impact I want my gift to have?
Anthony Petchel: Because most nonprofits lead their fundraising and communication efforts with a focus on need and impact, many donors have come to rely on the nonprofit to define success.
You can proactively define what philanthropic impact means to you by asking, “How will I know I’m successful in my philanthropy?”
You can then use that definition to select the organizations whose work aligns with the impact you want to have.
Does restricting a gift to a specific program have the most impact?
Anthony Petchel: All nonprofits rely on a delicate balance of restricted and unrestricted funds to operate.
Unrestricted gifts enable nonprofits to direct your donation to where it is needed the most. This empowers the organization to be responsive to the community, nimble, opportunistic, and to leverage restricted funds such as grants.
Generally, when donors place restrictions on their donation beyond “I want my gift to go to Program A,” it may be due to a lack of trust in how the organization will use the donation.
Building trust is a two-way street, and nonprofits should provide donors with information on how they convert resources to impact and report back annually on the impact they had.
For their part, donors can build trust through due diligence. Ultimately, they need to believe the nonprofit’s staff have the expertise to know the best way to achieve their mission.
Does addressing today’s need or working toward a longer-term solution make the most impact?
Anthony Petchel: As donors define their desired philanthropic impact, they often realize giving to a direct service organization might not have the most significant impact. A direct service organization works to solve an acute problem, such as the need for clothing for those experiencing homelessness today.
Effective philanthropists seek a balance between addressing today’s need and supporting upstream work to fix broken systems. To continue with the homelessness example, this could mean identifying the issues that are contributing to homelessness, such as unaffordable housing costs or mental health. The key is finding the right balance of direct service (impact today) and systems change (long-term impact) that aligns with your philanthropic goals.
Make the Most of Your Gifts
Philanthropic giving is a wonderful way to assign meaning and purpose to wealth, and there are a surprising number of variables that influence your charitable impact. If you would like to engage in meaningful conversation about philanthropy, impact, and personal legacy, let’s make a plan. Contact your Vista advisor to learn about our philanthropic planning services, designed to align your charitable giving values and goals with a thoughtfully-designed and actionable plan.