Return to The Money Mentor Blog

Is your favorite charity using donations responsibly?

A charity group works to sort donations
October 15, 2015

By Alissa Green

Whether you’re donating money because you believe in the cause, enjoy the tax deductions or simply think it’s the right thing to do – it’s important to ensure you’re donating to a legitimate charity. And, that your charity is using the money responsably. 

Luckily, there are two proven websites you can use to validate the worthiness of your favorite non-profits: Charity Navigator and Guidestar.  

I know, because I’ve been indecisive recently about where to donate, so I decided to use both and compare their numbers. The two non-profits I was considering? Ravinia Music Festival and Interlochen Center for the Arts.

For those outside the Chicagoloand area, Ravinia Festival is an annual summer music festival just north of Chicago that also supports music education; I worked their coffee cart for a summer in high school and usually attend multiple concerts a year. Interlochen Center for the Arts, meanwhile, provides year-round arts education as well as hosts multiple arts events year-round; I attended a fiction writing program for four-weeks in my teens. 

Access to the arts changed my life and I want to give back. But I don’t have unlimited pockets – so I need to make sure my modest donation will do the most good. Enter the World Wide Web.

Charity Navigator compares charities

 

A non-profit itself, Charity Navigator has emerged in recent years as a leading online marketplace where donors can evaluate and discover non-profits. You can search by your favorite charity’s name, by the overall cause (e.g., arts) or by searching for “4-Star Charities,” the site’s highest possible ranking.

Charity Navigator also has tips for how to be a better donor. One suggested tip is to donate more money to fewer organizations to help non-profits save time and expense processing your donation. I hadn’t thought of that before – and I’m definitely guilty of giving smaller amounts to multiple places. Noted!

Inputting my favorite charities’ names into the search box, I see each nonprofit’s overall ranking (out of 100) and how they score on both Financial and Accountability/Transparency criteria.

Interlochen scores a 90.80 overall while Ravinia scores an impressive 91.36. Ravinia appears stronger on the finance side while Interlochen is more transparent, but both scores mean each non-profit is in very good standing. I can also see each non-profit’s previous history and rating that spans several years.

Additional information includes each organization’s total contributions by year, the percent of donations that go to fundraising vs. programming and the compensation of its top leaders. All looks good across both charities I’m considering, but the compensation for Ravinia’s President and CEO, Welz Kauffman, gives me pause: he makes over $1 million a year.

Actually, the Ravinia President and CEO makes $1,085,312, which is nearly 3% of Ravinia’s operating expenses.

While I love the music and believe in Ravinia Festival’s cause of bringing arts to the community, this level of compensation is cause for serious concern. Couldn’t part of that salary be better spent? That’s just so...much money.

Interlochen’s president, meanwhile, makes less than half that amount, according to Charity Navigator.

Level of difficulty/annoyance signing in to Charity Navigator: 1/5. (EASY).

Good for: Verifying nonprofit tax status, Looking at big picture data for medium-size and larger charities, viewing PDFs of financial documents, donating directly to the charities from the site and more.

Cost for you: $0

Guidestar is a gigantic database of non-profit financial forms

 

Guidestar claims to be the world’s largest source of information on nonprofits. With data on 2.4M organizations, Guidestar has certainly built a compelling case in its favor.

Unfortunately...the company hasn’t upgraded its website in years. So, it’s not exactly user-friendly.

Why? For starters, users have to download multiple forms to see most financial data. However, to Guidestar’s credit, they do include far more charities than Charity Navigator in their database. For example, you can find information about The Alliant Foundation as well as other newer/smaller non-profits.  

To compare apples to apples, I look for information on Ravinia Festival and Interlochen. I start with Ravinia, and it appears my only options are to download the raw PDFs from 2013 or pay $125 to upgrade to a premium report.

I download the PFD and it’s a mess of numbers that those of us who are non-accountants will have to slog through. I can see the specific amount Ravinia spent on grounds and landscaping (yay?), but if I’m just looking for a high-level view, there’s way too much data. There also aren’t overall organizational ratings.

One advantage of complete data, though, is that you can see the complete picture; I can see that Ravinia Festival CEO actually doesn’t “just” make a cool $1,085,000; he was also compensated $280,507 in 2013 from Ravinia and other organizations. Interlochen’s President, Jeffery Kimpton, was compensated an additional $58,944 last year.

Level of difficulty/annoyance signing in to GuideStar: 4/5 (You need an 8-character, complex password to see non-profit data), reading donor reviews (as applicable).                                      

Good for: Looking at smaller charities’ financial forms, looking at complete financial documents across all charities.

Cost: $0 - $125 (for premium reports)

How non-profit online comparison sites altered my donation plans

 

Before I looked at Charity Navigator and Guidestar, I was pretty sure I’d donate $75 to both Interlochen and Ravinia. I enjoyed both organizations and that seemed like a good amount. But after reading more about each, I decided to donate $200 just to Interlochen. I want my donation to do as much good as it can, and based on Charity Navigator’s advice, donating more to fewer non-profits seems to be the way to go. Ultimately, I just wasn’t comfortable with the Ravinia president’s exorbitant compensation.

I also worked with the Alliant Foundation to match my donation, so Interlochen ended up getting $400 overall. Now that felt really good.