In recent years, the United States has proven to be one of the most charitable nations. In 2019, Americans donated a staggering $449.64 billion to various charitable causes, marking a 4.2% increase from the previous year. This rise was largely fueled by individual donations, which continue to be the largest source of charitable contributions. Furthermore, about 90% of high-net-worth households are involved in charitable giving. Even in 2020, when the pandemic hit, the second quarter saw a 12% rebound in donations, despite a 6% decline in the first quarter.

With so many donations being made, selecting the right charity might seem straightforward. It’s easy to donate to familiar causes like a child’s school or a well-known nonprofit. However, the U.S. alone has over 1.5 million registered nonprofits. With so many options available, finding new and meaningful causes to support can be a deeply fulfilling experience.

If you’re wondering how to choose a philanthropic organization to back, here are some helpful questions to guide your decision.

1. Does the charity align with your passions?

It’s important to choose causes that resonate personally with you. For example, if you’ve had many conversations about the opioid crisis, research charities that focus on that issue. Some might concentrate on treatment and cure efforts, while others may focus on offering support to families or survivors. Understanding the different facets of a cause will help you choose the most impactful area for your donation.

2. Are there reliable resources to vet charitable organizations?

There are several third-party platforms that can help you research and evaluate charities before making a donation. Some specialize in specific sectors, like international charities, while others cover a wide range of causes. These platforms often provide ratings and detailed reports on charities’ financial health and effectiveness. A few good resources to start with include:

• GiveWell
• Charity Navigator
• CharityWatch
• Universal Giving

3. What should you ask the charity before donating?

Once you’ve found a charity you’re interested in, it’s essential to ask the right questions to ensure they align with your values and goals. Consider asking the following:

• What is your mission? This helps you understand if the charity’s mission aligns with your personal beliefs.
• What are your goals, and how do you measure success? A reputable charity should be able to show how their actions align with their mission and outline measurable outcomes.
• What progress have you made? This can reveal whether the charity has tangible results or relies more on anecdotal success stories.
• How can I track your success? Transparency is crucial. A good charity will readily explain how they’ve been successful, what challenges they face, and how you can contribute to their efforts.

4. Is the charity financially stable?

Before committing to a donation, it’s important to verify that the charity is financially sound. The easiest way to do this is by using trusted third-party platforms such as GuideStar or Charity Navigator. These organizations analyze charities’ financial health by reviewing tax filings (Form 990), annual reports, and audited financial statements. They also assess how efficiently the charity allocates its resources, which can help identify any potential financial red flags.

5. How does this fit into your overall wealth plan?

While charitable giving is rewarding, it’s also vital to consider how it fits into your broader financial plan. Planning your giving strategy ensures that it aligns with your financial goals and overall wealth management plan.

By asking these key questions and using resources to verify your chosen charity, you can make more informed decisions about your donations, ensuring your contributions are both impactful and aligned with your personal values.