Making the Most Of Your Monetary Donations
How To Donate to Nonprofits and Social Change Organizations
What is a monetary donation?
Donations come in many forms. Donations (aka gifts or contributions) are a gift to a nonprofit organization, benefit, or cause. You can donate things like money, goods, time and talent, blood, rewards points, stocks, other assets, and much more.
You may also want to donate money to mutual aid groups or individuals in need (e.g. via a gofundme campaign), make a bequest as part of a will or trust, or make a grant with specific terms and conditions.
Although a donation can take many forms, this post talks about how to maximize the gift of cash, or individual monetary donations, to nonprofits.
What is a nonprofit?
Nonprofit organizations operate for the social good. They are sometimes called charities, humanitarian aid organizations, nongovernmental organizations (NGOs), or foundations. Hospitals, museums, universities, and religious entities can also be nonprofits.
See our post What is a Nonprofit? for more.
Why give to nonprofits?
Nonprofits are a vital social safety net for the vulnerable and they often pick up where the government has failed. Think basic needs such as health care, housing, education, and food. Some engage in important activities such as supporting survivors of violence, protecting the environment, and defending women’s rights, LGBTQI+ rights, and racial justice.
Because the U.S. has one of the weakest social safety nets compared to other rich countries, we have one of the largest nonprofit industries in the world. That also makes the U.S. one of the most generous countries in the world when it comes to individual giving.
In 2019, Americans gave $450 billion to U.S. charities. 69% of that giving came from individuals, compared to 17% from foundations, 9% from bequests, and 5% from corporations.
Interesting fact: Research shows that lower-income households give, on average, a higher percentage of their income to charity than wealthier households.
Why give money?
While all types of donations are appreciated, non-monetary donations don’t always meet the exact needs of the nonprofit. Monetary donations ensure that nonprofits are able to buy exactly what they need to achieve their mission and give them the flexibility to direct resources to where they are most needed. Cash donations also mean that nonprofits can be nimble in their responses to unexpected emergencies.
And, it is often more cost-effective. Nonprofits typically can purchase items they need in bulk, at a discount, and with less sales tax. For the amount you spend on a can of soup to donate to a food bank, that food bank could use those same funds to buy three cans of soup.
When you donate to a qualified nonprofit, it is tax-deductible. Save your receipts to claim the deduction on your taxes at the end of the year.
What type of work do you want to fund?
Most of us focus on the issues and causes we care about when deciding where to donate, and don’t spend much time thinking about what types of strategies different organizations employ while working on those issues. Nor do we think about the approaches that we are most interested in. When thinking about strategies and approaches, it doesn’t have to be one or the other. Each of the below has advantages, and all are needed. Many organizations use multiple strategies to fulfill their missions. And many donors give to a mix of approaches to increase their impact.
Direct services or systems change?
Some groups directly support individuals (think: domestic violence shelters, food pantries, job training), while others address root causes and work to change the structures that allow root causes to persist (think: advocacy, community organizing, public education, movement building). No-strings-attached donations from individual donors like you help organizations to imagine bold solutions that challenge the status quo versus relying on grant funding from the government, foundations, and major donors that may only be used for specific purposes. Supporting systems change work may mean expanding your giving plan to include donations to organizations and groups without 501(c)(3) tax-deductible status.
Learn more in our Addressing Immediate Needs and Long-Term Change post.
Bottom-up or top-down approaches?
Grassroots groups (aka community-based organizations) focus on ordinary people and are often entrenched in the communities they serve – giving them valuable insight into the needs of the community. Grasstops groups focus on leaders, decision-makers, and other influential people to affect change.
Big or small?
Some groups are lean, mean, fighting machines. Others are one-stop shops with the in-house ability to address multiple issues on multiple levels.
New or established?
Sometimes it makes sense to sustain what’s tried and true. Other times, you may want to take a chance on an innovative approach or support the up and coming.
Local or global?
Sometimes you may want to give close to home and benefit your community. Other times, you may be interested in supporting state or national efforts to tackle a particular issue. Or you may be looking for ways to do the most good for people in poorer countries or in countries experiencing conflict, famine, or natural disasters.
Direct or through intermediaries?
Having trouble deciding? Look for a fund that pools donations from multiple sources and redistributes them to various groups via grants and technical assistance. Funds often curate a diverse portfolio of organizations deploying a range of strategies to meet a specific goal.
Avoid analysis paralysis! Don’t overthink it. Most nonprofits are doing really great work, so if it’s a cause and a strategy you believe in, go for it!
When to make a donation
Anytime!
There is no time like the present, and your donation will always be welcome.
Just like the rest of us, nonprofits appreciate a steady income. It allows them to pay their bills on time and plan for the future. But the reality is, donations can fluctuate drastically throughout the year- making nonprofits some of the most creative and resourceful budgeters out there. In an attempt to increase reliability, many nonprofits depend on fundraising at specific times of the year such as: membership drives, fundraisers and galas, Giving Tuesday, and year-end giving.
One-time vs recurring
If you can afford to set up a recurring donation, consider doing so. Recurring donations provide the nonprofit with a reliable source of income and provide you with an opportunity to stay engaged with a cause you care about. That said, an organization will be just as happy to receive your one-time $180 donation as they are to receive $15 monthly.
Emergency response vs year-round
Many people may give during an emergency (think: natural disaster) or urgent call to action (think: organizing against the Texas abortion ban). This is great, and please continue to give in these times. However, year-round donations help nonprofits to try to prevent the emergency in the first place or have the ability to respond immediately without waiting for donations to start rolling in. Consider making a giving plan to decide what causes you want to regularly support, which organizations you want to give to, and when you want to make your recurring donations.
During an emergency, we recommend donating to locally-led groups already operational on the ground. It can be hard to figure out who the most effective local organizations are when a crisis hits, especially when it’s in another country. We also recommend donating to trusted international grantmaking organizations that redistribute funds to local groups in the form of grants. We like AJWS, Global Fund for Women, Global Fund for Children, Grassroots International, MADRE, Mama Cash, Thousand Currents, and Urgent Action Funds, among others. Check with them to see if they have grantee-partners in the country in crisis where you want to donate.
What to research before making a donation
We all want to make sure our money is going to a worthy organization. Here are a few simple ways to check up on a group before making a donation.*
Check out Charity Navigator and Guidestar for reliable data on their effectiveness.
Read through their website and annual report to make sure they share your belief system and to understand their impact.
Look to see if people with lived experience related to the cause are involved in the organization. That’s always a good sign.
Find out if they have a diverse board of directors, leadership, and staff because representation matters.
* Major donors carry out comprehensive assessments of effectiveness and impact on the groups they fund (referred to as due diligence). Most of us aren’t giving away that much cash; the amount of due diligence you do should be based on the size of your donation.
Beware of the overhead myth!
Nonprofits are just as financially rigorous and business savvy as the private sector. In fact, many nonprofits have to be even more savvy because they are often required to do more with less.
Overhead - things like staff compensation, utilities, and IT - is vital to the health and operations of a nonprofit. How can nonprofits solve the world’s complex problems if they aren’t able to invest in their staff and infrastructure? Just because nonprofit professionals’ motivation to work may include a bit of altruism, they still deserve decent salaries, updated technology, and pleasant workspaces!
Some people, and nonprofit rating systems, believe the ratio of overhead to program costs can help determine the effectiveness or impact of an organization. They want to see a small fraction spent on overhead. This is harmful because it prevents nonprofits from investing in their staff and infrastructure which can actually make them less effective. When making a donation, don’t use the overhead to program costs ratio as a factor in your decision. Instead, focus on transparency, leadership, governance, and results.
To learn more, read this open letter to the donors of America from the leaders of the top nonprofit rating systems, and listen to this TED Talk by activist and fundraiser Dan Pallotta.
Look for matching programs
Matching programs can maximize your giving and increase your bang for your buck.
Check with your employer to see if they have a matching program. It usually requires some simple paperwork, after which your employer will send a matching donation to the charity of your choice. (If your employer doesn’t have such a program, ask them to start one!)
Look for matching donors during membership and fundraising drives, and make your donation during a time when you know it will be matched (aka a matching session).
Sign up for programs that give back when you shop online with their platforms. While we recommend buying locally as much as possible, when that’s not an option, check out programs like Amazon Smile, Altruisto, Benefit, and Giving Assistant. You can also give back when you work out with Charity Miles or switch to SearchScene for internet searches.
Make a difference on the issues you care about.
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Originally published June 15, 2021.
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