What Do Your Charitable Contributions Actually Finance?

Nearly $375 million is provided annually for charitable causes. Most of this measurement and tracking is provided by the IRS. The ability to do so is simple; people report their charity and charitable value and are then able to claim tax deductions. However, the more important takeaway from this information is the volume of wealth transfer that happens via charity to a variety of causes, ranging in everything from faith-based organizations like Paz de Cristo, which represents social justice and an opportunity to make one’s community safer and stronger, to vintage car collecting clubs or the Girl Scouts. The simple fact is, people’s generosity goes a long way to helping out organizations in the community that help a lot of other people.

The Big Question

The big issue on peoples minds, however, is knowing where their money goes when they give to charity. That, of course, depends on the charity and its organizational goals. Some use it to purchase goods and services that help deliver their function to targeted community audiences. Others use the funding for administrative support such as paying rent, providing office supplies, paying for vehicles and fuel to transport their program to different places, and others put the money received into outreach. Each organization is different, so it’s important for those providing charity to at least be aware of what a given group does before providing charitable funds.

Measure by Metrics

One of the most common metrics used to measure a charity’s efficiency tends to be the cost of their fundraising versus dollars going to other activities. On average, a good number of organizations tend to spend 25 percent on administration. That can be a significant diversion of funds people think will go towards direct help and instead is spent on infrastructure and compensating people in the organization. One of the key ways charities reduce such costs is the creation of a lot of volunteer opportunity positions that give the organization free labor. Using the same resources, a charity could keep overhead considerably low and drive more dollars towards programs through volunteering than with paid workers.

Not Every Group is a True Charity

Unfortunately, there are a lot of scams and more every year. Annually, whenever there is a big topic or interest, fake charities come out of the woodwork to capture the good intentions of people and divert their donations to personal pockets. Law enforcement goes after quite a few of these scams, but plenty more exist, including supposed faith-based supporters. There is no charity police that vets these groups before they get started, so it’s up to consumers to pay attention before giving a donation. This is why donors give to trusted organizations like Paz De Cristo, who have a long history in helping communities in tangible ways.

A Valid Example

Charitable Tax Credit provides donators to options for helping out both qualifying charitable organizations as well as helping support qualifying foster care charitable organizations. Both go a long way towards improving the communities they serve.