Donate wisely

When you donate money, you’re helping others — and yourself, according to research. People who spend money on others tend to be happier(opens in a new tab). No matter the amount you can afford to give, you’ll probably experience greater happiness that even shows up(opens in a new tab) in your brain activity.

Whether you’d like to support fire victims(opens in a new tab) and domestic violence survivors(opens in a new tab), or you want to be an effective ally to trans people(opens in a new tab), donating money to nonprofit and crowdfunding campaigns is an effective and tangible way to make a difference. Money helps fund critical programs and often gives those in need and marginalized communities access to resources, like mental health care(opens in a new tab), clean water(opens in a new tab), and education(opens in a new tab). One of the best things about a monetary donation is that organizations and campaign organizers can quickly put it to use to meet their needs.

Donating to causes is important year-round, but there are times when giving becomes something we talk about collectively. The holidays often prompt conversations about philanthropy, as does the annual event known as Giving Tuesday(opens in a new tab). The latter is a movement that encourages philanthropy by connecting individuals to participating organizations as well as community and global campaigns. It was cofounded in 2012 by the Belfer Center for Innovation & Social Impact at the 92Y, a cultural and community center in New York City, and takes place the Tuesday after the post-Thanksgiving retail sale known as Black Friday.

Before you make a donation, big or small, here are some things you should consider so that your money makes the greatest impact possible.

It’s important to understand the difference between donating to a nonprofit(opens in a new tab) and a campaign you might see on a crowdfunding website. GoFundMe, which says it's the largest of those sites, also acquired the crowdfunding platform YouCaring(opens in a new tab). Donations made to crowdfunding campaigns are, for the most part, not tax-deductible because they are considered to be "personal gifts.(opens in a new tab)" (GoFundMe recommends(opens in a new tab) consulting a tax professional for information about getting a tax deduction for your donation.)

If you donate to an IRS-recognized nonprofit, you may be able to deduct(opens in a new tab) the contribution and lower your tax bill. The IRS defines "qualified organizations(opens in a new tab)" as nonprofit groups that are religious, charitable, educational, scientific, or literary in purpose, or that work to prevent cruelty to children or animals. Those nonprofit organizations fall into one of two categories(opens in a new tab): private foundations and public charities. In the simplest terms, private foundations typically have a single major source of funding and charities have many sources.

There are also key differences in how nonprofits and campaigns operate. Whereas a nonprofit has a board of directors who oversee the organization’s activities, crowdfunding campaigns can be created by an individual, group, or organization. In order for nonprofits to be tax-exempt, they must fulfill the IRS requirements(opens in a new tab) and file an application. GoFundMe does not have an application process — nearly anyone can start a campaign. The two, however, are not mutually exclusive. Some nonprofits(opens in a new tab) may choose to raise funds on a crowdfunding platform.

Jackie Enterline Fekeci, the director of communications and outreach at GuideStar, says it’s important to donate with both your head and your heart. GuideStar gathers and organizes information about nonprofits for its database, which helps users make informed decisions about which nonprofits to donate to. 

“What that means is you pick a cause that really means something to you, but you also use your head and you take a step back, make sure that you truly understand the type of organization that you’re giving to and verify that it’s a legitimate nonprofit,” says Enterline Fekeci.

Especially if you’re on a tighter budget, it can be difficult to prioritize and decide exactly where your money goes. GuideStar’s giving guide(opens in a new tab) recommends narrowing your search by considering what’s important to you, where you want the charity to do its work, and whether you want to support a large or small, new or old charity. GuideStar also recommends(opens in a new tab) asking a nonprofit questions before investing, such as “What are your annual goals, needs, and results?”

The Federal Trade Commission, a federal agency that helps protect consumers from unfair and deceptive business practices, recommends donors(opens in a new tab) do a Google search before donating to a charity. Type the charity’s name along with keywords such as “complaint,” “review,” “rating,” or “scam.” If nothing shows up, don’t stop there. Consult charity watchdog websites, such as The Better Business Bureau’s Wise Giving Alliance(opens in a new tab), Charity Navigator(opens in a new tab), CharityWatch(opens in a new tab), and GuideStar(opens in a new tab), to learn about an organization’s rating. The more you know about an organization, the more confident and comfortable you’ll feel about making a donation.

GuideStar profiles all the tax-exempt organizations included in the IRS Business Master File(opens in a new tab). The information provided comes from IRS data and from the organizations themselves. Nonprofits can choose to “claim” their profiles and offer supplemental information, such as an audited financial report(opens in a new tab). Depending on how much information they provide, nonprofits are awarded the platinum, gold, silver, or bronze seal of transparency(opens in a new tab). A reputable organization will have a clear mission statement, “measurable goals,” and concrete achievements, according to GuideStar’s giving guide. (opens in a new tab)

If the charity you’d like to donate to is not in the GuideStar database, GuideStar recommends(opens in a new tab) you ask to see its IRS letter of determination. Try to contact the organization directly through its website. If you ask for clarification or additional information and the organization does not respond, Enterline Fekeci says that’s a red flag. If an IRS-recognized, tax-exempt organization is violating the law (engaging in commercial, for-profit business activities, excessive lobbying activities, etc.), you can report them here(opens in a new tab).

Research will help you make an informed decision, and it can help other donors as well. GoFundMe uses fraud-prevention technology, but it also relies on its community to report any campaigns that misuse the platform(opens in a new tab), which could involve organizers posting misleading information about a campaign or failing to deliver funds to the intended beneficiary. If GoFundMe discovers misuse, the company may refund up to $1,000 per donor. (opens in a new tab)

Fraudulent campaigns make up less than one-tenth of one percent(opens in a new tab) of campaigns on GoFundMe, but there’s risk nevertheless. A New Jersey couple and a veteran experiencing homelessness are facing criminal charges(opens in a new tab) after reportedly making up their GoFundMe campaign story, which raised over $400,000. GoFundMe says it is fully cooperating and assisting law enforcement officials to recover the money. Everyone who contributed to the campaign will receive a full refund.

“While this type of behavior by an individual is extremely rare, it's unacceptable and clearly it has consequences,” a GoFundMe spokesperson said in a statement. “Committing fraud, whether it takes place on or offline is against the law.”

Crowdfunding campaigns should be transparent about how much money they need to reach a certain goal and how the money will be used. If you know those two things, it’s easier to gauge how much money you should donate because you’ll understand the impact it can have.

”We always encourage people to fully research whatever it is they are raising money for and to be absolutely transparent on their GoFundMe page, so donors can make an informed decision on what they’re donating to,” Francis Bova, a member of the trust and safety team, wrote in an email.

The same can be said for nonprofits. For example, if you donate $2(opens in a new tab) to Period, someone will receive hygiene products for an entire menstrual cycle, according to the organization’s website. It’s also important that organizers post frequent updates about their progress and show their donors how their money is making a difference. Donating to a long-standing cause or organization shouldn’t be a one-and-done deal; it should be an ongoing conversation between the donor and the nonprofit organization.

Whether you’re donating to a crowdfunding campaign or a nonprofit, you should feel welcome to ask questions. On GoFundMe, you can contact a campaign organizer by clicking on the mail icon next to their name, located on the right of every campaign page. 

If someone is pushing you to donate right away, without answering any of your questions, that’s a red flag. Don’t make the donation. Instead, research an organization you trust and then come up with a payment plan. Whether you plan to make a one-time contribution or donate monthly, you should know how much and when you’re going to contribute. Pay by credit card or check, and avoid paying with cash when possible.

“It’s not the best practice because you’re not able to track that transaction,” says Enterline Fekeci. “You’re not necessarily getting a receipt.” You’ll want to keep a record of your donation for when you file your taxes.

To make sure your money is transferred securely, consider donating through a giving portal, like Network for Good(opens in a new tab), which powers Charity Navigator’s giving basket. The website guarantees that your “donation is safe, secure, and private.” Enterline Fekeci explains that giving portals are convenient for donors who are looking to donate to more than one charity at a time. Network for Good collects donations for organizations that are in “good standing with the IRS."

Whichever platform you choose to donate through, you should expect processing fees. Network for Good charges a 3.95 percent tax-deductible fee(opens in a new tab) to pay for administrative costs. GoFundMe deducts 2.9 percent(opens in a new tab) and $0.30 per donation made in the U.S. Enterline Fekeci says that a nonprofit that receives donations through its own website will likely also have to pay fees to the company that processes the transactions. If you do pay through an organization’s website, make sure that you access the website on your own, not through a link.

It’s natural to feel overwhelmed by the process. There are so many organizations out there, but step by step, you’ll be able to find your right match and securely make a donation. Even if you don’t have abundant resources for giving, donating to a cause you believe in (through a reliable organization or campaign, of course) is worthwhile. You’ll help people who need your support, and you’ll probably feel happier, too. If anything else, donate because it’s the right thing to do. There is so much bad news we digest on a daily basis, but your donation, however small, can combat it and help make the world a more just place. 

This story has been republished for Giving Tuesday 2019. It was originally published on Nov. 21, 2018.