Why It Is Important To Check the Transparency of a Charity Organization


More transparency leads to more donations. Honest and ethical charity organizations build the trust of donors. According to the National Center for Charitable Statistics (NCCS), more than 1.5 million nonprofit organizations are registered in the U.S that means donors have plenty of options to choose from. But how many of these organizations are sincere to work towards the cause? Donors want their hard earned money to actually go to them who are in need. It is important to check if the organization is legitimate. Donors should do some research on their part to make sure they are not contributing to a fraud organization.



During the time of natural calamities, it is often seen that many non-profit organizations mushroom up and claim that they want to help those in need. During this time, we see many social media aids which grab our attention. Innocent donors fall victim to sham non-profit organizations. According to a report, 22 percent of all fraud cases in the United States happen in the non-profit sector.

What Donors Look For In A Non-Profit Organization?

Donors want an honest and ethical charity organization dedicated to the cause. Organizations that don’t squander resources are the preference of donors. According to a report Americans gave 410 billion to charities in the year 2017. Clearly, donors are more than willing to help a cause.

Mission

Donors want to give to a non-profit whose mission aligns with the values of the donor. For example, your charity is working towards the water-crisis in a certain city, but the donor doesn’t believe that water crisis can happen in a first world country in today's’ time; then you fail to align with the values of the donor. It is important to first educate the donor about the cause.
It is important to notify the donor if the organization’s mission changed over time; so that the donor doesn’t feel cheated.

Tax-Exempt Status

Let donors know if your organization is given tax-exempt status. IRS states “To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual. In addition, it may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.”

It is important to practice transparency; if the organization has yet to achieve the tax-exempt status, let your donors know beforehand.

Annual Reports

A user can check the annual reports of a non-profit organization to gain a better understanding of how the money is being spent by the organization. Annual reports build the trust of donors in an organization. They feel informed.

In annual reports the amount of donation received, name of the donors, thank you notes to the donors and how the organization helped various people are published.

Tools

There are various tools like charity navigator, GuideStar which rank the non-profit organizations for free. Donors can take help from these tools to scan sham non-profit organizations.

Conclusion

Honest and ethical charity organizations are not easy to find in today’s world; especially when there are so many fraud cases in recent times. It is important to do full research before trusting a non-profit organization. There are many non-profit organizations which are dedicated to the cause wholeheartedly.



Location: Perth WA, Australia

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