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Donating to charity
5 Tips: How to make your donation go far.
July 29, 2005: 2:17 PM EDT
By Gerri Willis, CNN/Money contributing columnist

NEW YORK (CNN/Money) - Tens of thousands of children are going to starve to death in the West African Nation of Niger unless they get aid. In fact, 1.2 million people are starving. It's a crisis that could have been avoided, according to the United Nations. But it seems no one was listening to the warnings last year.

In today's 5 tips we're going to tell you what you can do to help a worthy cause.

1. Find specialized charities

The UN is asking for $30 million in aid to Niger. So far, private donations are at $250,000 according to the United Nations World Food Programme. There is a long road ahead of us.

If you want to donate to this crisis, think regionally, advises Art Taylor of the Wisegiving Alliance, the charity arm of the Better Business Bureau. If you want to help people in Niger, find an aid organization that specializes in Africa.

Go to the umbrella organization for relief agencies called Interaction at www.Interaction.org. Once you are on their Web site, click on aid organizations to find out their country of specialty and their mission statement.

For the crisis in Niger, check out the non-profit group Action Against Hunger, www.aah-usa.org, Africare www.africare.org and Worldvision at www.worldvision.org.

2. Bring on the paperwork

We usually try to cut down on the amount of paperwork we get, but when it comes down to donating to a charity, the more written info, the better. Charities by law must give information to potential donors.

Request a copy of the charity's latest annual report. Never give to a charity you know nothing about. This annual report should have a list of the board of directors, a mission statement and the most recent financial statements.

If you don't have time to surf online, or to request more information from the company, simply call the Wisegiving Alliance of the Better Business Bureau and they will issue you a report on the charity free of charge within a few weeks. That Web site is www.give.org.

3. Follow the money trail

When you donate to a charity, you're not only paying for relief efforts, you're also paying for administrative work and fundraising expenses for the non-profit.

The American Institute of Philanthropy recommends that at least 60 percent of your donation should go to the cause you want to sponsor. The remaining percentage can be doled out to other organizational costs.

You should keep in mind that newer groups and organizations may have more start-up and fundraising costs than older, more established organizations like the Red Cross.

The inner workings of charitable organizations may not be very transparent. So it may be difficult to decipher exactly where your charitable dollar is going. Ask specific questions about what program accomplishments have been achieved.

Watch out for charities that have high "public education" costs, according to the Institute. This label may disguise direct mail and telemarketing costs. To get the lowdown on charities, you can buy a "Charity Rating Book" from the American Institute of Philanthropy for three dollars. Check out www.charitywatch.org.

4. Hang up on telemarketers

Telemarketing is the most expensive kind of fundraising out there, says Taylor. Typically telemarketing contracts specify that the telemarketing company keep 80 percent of what they raise. If you're giving $100 to a telemarketer, the charity is only seeing about $20 of that.

If a company does resort to telemarketing, it's usually a sign that your charity organization has some serious priority flaws. Telemarketers also may try to pressure you into making a decision.

While getting junk mail is generally unpleasant, it does give the donor time to think about the organization and whether or not to pledge money. It's much less expensive and less intrusive, says Taylor.

5. Beware of scammers

Scam artists may take advantage of this situation by creating bogus fund-raising operations. The Federal Trade Commission says that complaints about fraudulent charities have increased every year for the past 5 years.

Watch out for companies that have sound-alike names. Taylor says there are hundreds of organizations that have word "cancer" in the title and there are thousands of organizations that are associated with doing charitable work with children because of their charity name.

"It's easy to assume these kinds of organizations are sponsored by these entities," says Taylor. There are over 1 million non-profit companies that exist today. That's more than double the number from just two decades ago.

If you think you may have been the victim of a scam charity, call or log onto the FTC Web site at www.ftc.gov or contact your local Better Business Bureau.


Gerri Willis is a personal finance editor for CNN Business News and the host for Open House. E-mail comments to 5tips@cnn.com.  Top of page

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