Giving to charity is also a kind of investment


Many of us give money to charity. When we do, we rarely check up on the genuineness of the cause. We give because it makes us feel good. But sad to tell many of these so-called charities have turned out to be major frauds. They dupe people of their hard earned money by using the funds given in the name of charity for their personal enjoyment.

Charities supposedly meant to collect money for cancer or for old people or for children or for victims of war, floods, famine etc do not use the money for the stated purpose. Rather this has become an easy way for unscrupulous people to line their pockets. There are other charities which are legitimate but do not use the money judiciously so there is wastage.

Investment made for good purpose

What we need to realize is that giving to charity is a kind of investment made for a good purpose. It involves giving away money that we have worked for and it is only reasonable that we ensure that it is spent wisely and well.

It therefore becomes necessary for us to check out the charities that we are donating to. We need to see how the money is spent because we give for a specific purpose and we would like to see it being used for that purpose. We need to make certain that our donation gives a “good return”.

Be sure of the credentials

Hence we have to be sure of the credentials of the organization we are donating to. We need to review their legitimacy, their financial position, their governance, their projects and the efficacy of their work, the credentials of the people manning the organizations, their assets, expenses on the programmes, expenses on salaries etc of their executives etc.

There are various ways in which this can be done. We can check on the internet how other individuals or organizations have assessed and reviewed this particular charity. Another source of information is the balance sheet of the organization – this will give a fair idea of the assets and liabilities, operating expenses, fund utilization etc; some of these concerns may be too small and may not have balance sheets but they would all be maintaining accounts and if you are donating money for a purpose, you have the right to ask and get details of how they utilize their funds. Look at their tax returns where available.

Check their mission statement – this has to be spelt out in detail. Anything vague is suspect because then there is no accountability about the spending.

Misuse of funds

Be careful of donating to an organization that has a lot of financial transactions between family or group members – this could indicate a misuse of funds.

Do not get forced into making a donation. Ask for a face-to-face meeting where you can ask relevant questions before putting your money in. Do not give if you feel uneasy about the organization. Plan to donate to a cause you believe in – it will keep you involved to a larger extent than otherwise. Or donate to a place where you personally know someone – it will be easy for you to check the activities.

And if you want to absolutely certain of the organization you could think of hiring a consultancy firm to verify the legitimacy of the concern.

Whatever you do, donate based on facts supported by gut feel and personal preference. And see that your money makes a difference to somebody somewhere.