How to Determine What Non-Profits to Donate To
Have you been trying to figure out what nonprofit to donate to? Some of the main reasons why many people decide to donate to charity are a desire to give back to the community, a passion for a cause, and a wish to help make a positive impact on the world. There is the added advantage of being able to deduct charitable donations from tax obligations.
As a business owner who is considering supporting a non-profit organization, you may not be sure how to evaluate and choose a charity that aligns with your values and goals. The National Center for Charitable Statistics counts more than 1.5 million tax-exempt organizations in the United States, so finding the right fit for your giving might seem overwhelming.
Learning more about a charity, its programs, and how your contributions will be used can be a wise investment of time. In this post, we’ll go over some important points to take into consideration when determining which non-profit to support. But before we do that, let’s define what a non-profit organization is, and understand the difference between a foundation and a charity.
What is a Non-Profit?
The term nonprofit is meant to describe an organization not operating primarily to make a profit. Instead, it is an organization whose mission focuses on furthering a social cause or a shared goal or mission. Stated simply, a nonprofit organization ( NPO) is a business that has been granted tax-exempt status by the Internal Revenue Service (IRS) because it has religious, scientific, charitable, educational, literary, public safety, or cruelty-prevention mission or area of work. An organization needs to apply to request 501(c) from the IRS, prior to operating with a tax exemption. There are actually about three dozen different types of nonprofits that congress has created.
Two Types of Non-profits
501(c)(3) organizations are divided into two main categories: Public Charity and Private Foundation. Public charities are organizations that can campaign and obtain support from the general public, and the donations made to public charities are in most cases tax-deductible. Whereas private foundations distribute the funds they receive in the form of grants to fulfill a public purpose. Contributions to private foundations are usually also tax-deductible. Another important difference is that private foundations are not permitted to engage in campaigns or lobbying activities. In most cases, business owners prefer to support a public charity that aligns with their values.
How to Research and Decide Which Non-Profit to Support
Let’s go over some important points on charitable giving that will help guide you towards making a meaningful donation.
1. Define Your Philanthropy – Before researching charities, it’s important to define your own philanthropy. Think about your own values, passions, and interests and what kind of cause you would like to support. Examples of this include causes that work to help underprivileged or marginalized children, victims of trauma or abuse, animal welfare, or preservation of the environment, to name a few.
2. Research Eligible Charities – Now that you have a list of causes or interests you wish to support, you can start researching charities. Resources such as charitywatch.org, guidestar.org, charitynavigator.org, and givewell.org are great places to start. These sites provide comprehensive evaluations on a charity’s work, how funds are used as well as recent tax filings and governance documents.
3. Decide if you want to support a local or global cause– You may prefer to invest in your local community or give to a charity that has a more global impact – or both. The advantage of supporting a charity with a global presence is that even a small gift can go far in terms of bringing aid and services to underdeveloped countries and communities. You can request for your donations to support specific projects or aspects of their cause.
4. Determine co-marketing opportunities – In addition to the tax benefit, supporting a non-profit will also enhance the reputation of your business, since it demonstrates your values, your desire to pay forward, and support a good cause. It also provides great marketing opportunities. Look at an organization’s online presence and digital marketing campaigns to explore possible co-marketing collaborations.
As Una Osili, Professor of Philanthropic Studies at Indiana University points out “Probably the most important thing for donors is aligning the causes they give to with their own values, passions, and interests. That’s what leads to sustained engagement with a cause, which will help your giving become more intentional and deepen your relationship with a given charity.” We hope these points have helped simplify the process of researching and supporting a charity. Supporting a good cause is a win-win relationship that will elevate you, your business, and your connection to your community.