How Charities Can Regain Lost Trust (Part II)

In order to continue supporting our “brother Israelite” in times
Of need, both donors and non-profits must transform their
relationship. Donors and non-profits have an informal agreement
in which donors give money to specific non-profits with the
expectation that the non-profits are effectively supporting their
brother Israelite. This agreement is based on trust. At present,
this trust has been lost. The Wall Street meltdown and the Madoff
scandal have caused donors to feel uncertain; donors no longer are
certain that their dollars are being used effectively. The present
system of giving, based on trust, must be transformed to a system
based on transparency. Those non-profits that highlight
their transparency will regain the trust of donors; those
non-profits that highlight their mission, without providing
financial transparency, will lose support.

Following are recommendations for transforming the donor-charity
relationship. This week’s blog will discuss actions that the donor
should take. Next week’s blog will discuss actions that non-profits
should take.

Recommended Donor actions:
1) Be personally responsible with the dollars you give.
Do rigorous due diligence when giving money charity.
This entails looking beyond the mission statement of the
charity you give money to. Examine the charity’s financial
efficiency, its ability to survive an economic downturn, and
its investment practices.
2) Access the following resources:
a) Charity Navigator (http://www.charitynavigator.org/)
provides comparative efficiency ratings based on the most
recently filed tax returns.
b) Guidestar (http://www.guidestar.org/) provides the actual
tax return filed by the non-profit.
3) Communicate directly with your target charity. Ask the charity
about their finances. Ask the charity how financially efficient it is.
Ask the charity about their investment practices. Ask the charity
if it had invested money with Madoff. A reluctance to answer your
questions should give you caution about donating to this charity.
4) Use donor advised funds to park your charitable money while
doing your due diligence. Donor advised funds are intermediate
vehicles that allow you make a tax deductible contribution, that
allow you to maintain control over your money, and allow you to
keep your money in a safe place. Examples of donor advised
funds are:
a) Jewish Communal Fund
(http://www.jewishcommunalfund.org/) has been helping
individuals, families, corporations and communal groups achieve
their philanthropic goals for over 36 years. It had no exposure
to Madoff investments.
b) Jewish National Fund
(http://www.jnf.org/) provides donor advised funds in addition
to being a vital part in helping the State of Israel develop its land.
c) Jewish Federations in the following cities offer donor advised
funds: Atlanta, Baltimore, Boston, Chicago, Cleveland,
Detroit, and San Francisco.
d) Fidelity Charitable Gift Fund
(http://www.charitablegift.org/) is the largest donor advised
fund in the nation. Since 1991, it has helped more than 55,000
donors recommend more than $9 billion in grants to over 129,000
nonprofit organizations.

Next Week's Blog: Recommended non-profit actions