Americans contribute billions annually to charitable organizations — both locally and internationally. Those funds are crucial for enabling nonprofits to fulfill their missions.
But how can you be confident that your money will be applied the way you expect?
Before you hand over cash to a charity, take a moment to confirm where your contribution will actually go.
3 Things to Think About Before Donating Money to a Charity
If you’re able to give — or even if you don’t have much but feel strongly about a cause — it’s wise to assess the charity beforehand.
Are your donations supporting meaningful programs, or merely covering bloated administrative expenses?
You’ll want your gift to have the greatest possible impact. Below are some pointers to guide you.
1. Confirm You’re Donating to a Real, Credible Organization
It never hurts to review the charity’s profile on an oversight site like Charity Watch or Charity Navigator.
There you can look up the group and find its address, mission statement, tax status and a breakdown of total expenses versus total contributions.
Charity Watch also reports how much it costs the organization to raise $100, which can indicate the charity’s effectiveness (or lack thereof).
Charity Watch assigns letter grades such as A, B or C. Charity Navigator uses a one-to-four rating.
2. Understand Exactly Where Your Donation Is Going
You don’t want your money to line someone else’s pockets — unless that’s the intended recipient.
The figure that helps reveal how donations are spent is often called the program efficiency or program expense ratio.
A higher efficiency ratio is favorable. It shows that a charity focuses more of its resources on delivering services aligned with its mission.
As a rough guideline: the most efficient charities devote at least 75% of their budgets to programs and services, with the remaining amount covering administration and fundraising.
Finding this spending ratio is quite simple. Visit Charity Watch and search for the charity. You’ll see a “program expense ratio” that shows the proportion of total expenses spent on programs versus overhead.
3. Check the Organization’s Nonprofit Status for Tax Purposes
When you give, verify whether the contribution is tax deductible. This matters to many donors because deductible donations reduce taxable income.
To determine tax treatment of your gift, check the charity’s tax classification.
You can find a group’s tax status on Charity Watch or Charity Navigator. You can also consult the organization’s own website, the IRS or GuideStar.
The two most common classifications are 501(c)(3) and 501(c)(4).
Generally, donations to 501(c)(4) groups are not tax deductible, while gifts to 501(c)(3)s typically are.
So if you’re hoping for a tax write-off, aim for a 501(c)(3) organization before you give.
The IRS provides helpful information about charitable contribution deductions for those trying to save come tax time. It’s worth a read.
Keep in mind: you can only claim charitable contributions if you itemize deductions on your tax return. Most taxpayers don’t itemize.
Per The Tax Foundation, roughly 87% of taxpayers used the standard deduction in 2019 instead of itemizing.
For the 2024 tax year, the standard deduction is $14,600 for single filers, $29,900 for married couples filing jointly and $21,900 for heads of household.
That means your deductible expenses — including charitable gifts — would need to surpass $14,600 (or $29,900 for married joint filers) before a charity tax break is advantageous.
For many people, that threshold won’t be reached.
If you’d like to explore ways to give thoughtfully while also accessing potential benefits, check out our guide on charity freebies and savings.
Alex Martin is a Certified Educator in Personal Finance and a former staff writer for Savinly. Jamie Ortiz is a former staff writer.
