On Memorial Day and throughout the year, many Americans honor those who have lost their lives in the line of duty by donating to charities that help military veterans. It can, however, be daunting to choose from the more thanoperating nationwide.
Donor trepidation is magnified by thethat have embroiled vets’ groups. In fact, more than 10 percent of the charities tagged as “ ” by the Tampa Bay Times and the Center for Investigative Reporting in 2013 focus on veterans.
As a professor who researches nonprofit organizations and teaches about their finances, I have observed that while some some veterans’ charities do squander donors’ dollars, others make the most ofI have observed that while some some veterans’ charities do squander donors’ dollars, others make the most of donations in meeting their mission. Fortunately, a little research goes a long way toward spotting the difference between a good cause and a lost cause.
The following four tips will help you vet these charities.
1. Learn what exactly the charities do
Be wary of vague statements about a group’s activities. While language indicating that a charity “supports” or “honors” veterans does not always signal a problem, it does mean you should seek more specific information. Many of thethat have , such as and , have had vague mandates to about what veterans need.
A detailed description of a group’s mission and activities can instill confidence that veterans truly benefit from its work. An exemplary charity is the, which flies veterans to Washington, D.C. to visit military monuments and honor fallen colleagues. The benefits are self-evident, as I’ve seen firsthand as a flight volunteer. , which provides temporary housing to families of veterans receiving treatment at VA facilities, is another good example. There are many ways that organizations can and do directly serve veterans. To find them, look for clear-cut programs you find meaningful and significant.
2. Find out what share of the money raised for organizations actually supports them
Another common pitfall: for-hire fundraisers that siphon too much of the donated funds.
Michigan’s attorney general determined that only 39 percent offor charity in the state in 2016 actually supported those groups. The fundraising contractors kept the rest of the money. The picture is even more lopsided for veterans’ charities in the state, with only making it into their coffers. The track record in Michigan is no anomaly – , and other states have found similar patterns.
Professional solicitation is not inherently problematic – but outsourced fundraisers keeping most of the money raised for a charity is a real concern. The federal government does not track this information but most offices of state attorneys general maintain databases that indicate how the organizations raising funds in their states stack up. Since national campaigns also show up in these databases, even if your own state doesn’t make all the details easily accessible, you can use the online tools other states offer to evaluate different charities.database is especially user-friendly.
3. Check out IRS 990 forms
OK. I know perusing IRS forms is not everyone’s favorite activity. But it’s the best way to discover how donor dollars are actually spent. Finding a charity’s tax form is easy, even if groups don’t post them on their own websites, thanks to databases like Propublica’sand the Foundation Center’s .
If you do check out a 990 form, be sure to go to page 10. That’s where nonprofits classify their, both by function and type. There, you can see where donated money primarily goes. If the organization has a stated focus on providing financial assistance to veterans, for example, you should see lots of grants to individuals on line 2, and not so much in the way of advertising, travel and postage listed on the other lines.
Consider how the, a group that provides financial and other aid to injured and ill post-9/11 veterans and their families, stated its functional expenses for its 2016 fiscal year. The numbers indicate that the group spends over 90 percent of its funds on its mission. Three-fourths of that mission spending is direct grants to individuals – a good sign.
4. Inquire about donor privacy policies
When you make charitable donations, you give away both money and personal information. What charities do with your personal data is part of the picture and how they handle this information varies widely.
Consider how the, among the nation’s most visible veterans’ organizations, has handled donor data. The group came under fire in 2015 and 2016 for alleged , as well as routinely selling and defending this practice. The controversy resulted in a .
When it comes to vetting charities, a little work goes a long way. These four steps should help you find veterans’ charities with goals that match your own and that you can trust to make the most of the money you give away.
, Fisher College of Business Distinguished Professor of Accounting,