Making a donation to a nonprofit is a generous act that can support the organization’s mission, help others, and make a real difference in the world. However, some people are uncertain or concerned about what happens after they make a donation—where does the money go? Is there a way to ensure it gets to the right place and supports the goal you are most passionate about?
The good news is that most organizations are very upfront about how they handle donations; a little time and research can give you the confidence that your donation is doing exactly what you intended.
What happens to a donation after it is given to a charity?
The allocation of a dollar is different with every charity, but every nonprofit has to assign their expenses an additional ‘tag’ that hits one of three buckets: programs, management and administration, or fundraising. Some expenses can be allocated across more than one of those three areas depending on the purpose of the expense.
- Programs – dollars spent directly on a mission-related purpose, i.e., grants to hospitals, purchasing educational brochures, and salaries for people whose role is to fulfill the organization’s mission or facilitate the program work
- Management and Administration – expenses to support more of the internal operations and expenses that aren’t related to programs or fundraising. These are items like accounting team salaries, software, and office administrative expenses.
- Fundraising – costs involved when helping to raise funds, including salaried individuals or consultants who work on fundraising campaigns, fees associated with giving platforms, and certain advertising
The standard of best practice around programs expenditures is to be at least 65% of funding received, set by the Better Business Bureau Wise Giving Alliance. You can look up most nonprofits on Charity Navigator and review their allocations for expenses.
For example, an organization with 75% of funds going to programs, 15% to marketing and 10% to fundraising means that that 75 cents of every dollar you give is going towards a direct program service, while the remaining 25 cents is supporting critical overhead that the organization needs to maintain its services, staff, and the operating functions that keep the organization in compliance with various rules and regulations (such as conducting an audit or paying for insurance).
Can I choose which program my donation supports?
Yes, in most cases you can request that your donation be restricted to the program you are most passionate about.
Nonprofits understand (and truly hope) that one or more program focus areas resonate with their donors enough to encourage financial support of the work. When a donation is restricted to a particular program area, nonprofits are diligent about ensuring the funds go specifically to that program.
However, unrestricted donations are ideal for nonprofits.
For years nonprofits have been expected to spend as much as they can on direct programs, and as little as possible on any back-office support, which has also come to be known as the “overhead myth.” This unsustainable framework leads many nonprofits to struggle to maintain the staff, infrastructure, and systems to properly steward donor dollars and keep the business afloat. One bad year can force a nonprofit to close its doors because they are often overextended in trying to increase their program percentage at the expense of the sustainability of those very programs and the support needed to make a long-term impact across the full organization.
Consider an unrestricted gift, donating to support the whole of the organization, to ensure that program services are efficient and maximized to their fullest potential.
How can I learn more about the programs my donation supports?
You can visit the website of desired nonprofits, view programs pages as well as information on support, impact, and donation options. Likewise, it is easy to follow a nonprofit’s social media pages to see real-time updates and the impact of donations in action. Finally, you can find ratings and reviews on Great Nonprofits, Google, Facebook, and more. Click here to learn more about charity ratings and what they mean.
You can also look for programmatic percentage statements that charities use. For example, “On average, over 80% of National Breast Cancer Foundation spending is directed back into our programs that support women facing breast cancer.”
Wrapping up: Your donation’s impact
Your gift of any size can help a nonprofit help others.
If you are able to donate, it is smart to research potential nonprofits first, look at how donations are spent, and determine what your contribution might impact. You should never feel rushed or pressured. Further, most nonprofits would be happy to discuss any questions or concerns you may have prior to making a donation.
Many organizations host giving campaigns or fundraising drives at certain times each year, but will be happy to receive your donation when you are ready to make it. Some people like to make smaller donations to multiple organizations while others prefer to concentrate their funds in one place.
With so many amazing nonprofits to donate to, you have the gift of knowing that your donation will definitely support positive change in the world.