Here are 4 Steps to Conduct Due Diligence on Charities

Perhaps the greatest benefit to building wealth is the opportunity it provides you to give back. No matter where you are in life, you may be driven by a sense of purpose beyond yourself. You may not just want to build wealth to make your life better, but to make the world better. And you have the opportunity to do so by supporting causes and initiatives that matter to you. 

The good news is that there are many charities that are making a profound difference in the world. For just about every cause, there is an organization or movement inspired to affect change for it. If you care deeply about something, there is likely a charity devoted to it.

However, before you start gifting to charities, there are some important steps to take to determine which ones you should choose. Not all charities are created equal, and it’s vital to understand certain details about each one.

Here are four steps you should take to conduct proper due diligence on charities. 

1. What is your mission?  

Prior to choosing specific charities to support, you need to understand the most important piece of the puzzle: you. Here are some important questions to ask yourself when creating a charitable mission statement:

What specific causes would you like to support? 

The more specific you can get, the better. Remember, there are charities for just about every cause and issue out there. Do you want to help cure pediatric cancer? Are you passionate about helping young women at risk? Do you have an affinity toward animals? What matters most to you?

Perhaps even before you settle on specific causes, get clarity on why those causes matter. Ask yourself these 3 key questions:

  1. What are your core values or principles?
  2. What inspires or upsets you about our world or society in general?
  3. What are some formative experiences in your life and how did they shape you?

When you understand yourself better, you can narrow down your search to charities that truly matter most to you and the problems you want to solve in the world. 

How many charities would you like to support this year?

As much as you would like to, you won’t be able to support every charity that speaks to you – at least, not at the same level. Determine how much you would like to give and how many charities you will be able to give to. 

Will you support local, national, or international organizations?

Determine the scope and reach of your support. Do you want to invest more in your local communities? Do you care more about national causes? What about international charities? Narrow your focus on the type of impact you’d like to make. Local charities can often inspire more change with fewer funds than an international charity might need, but that doesn’t necessarily mean ignoring larger causes. Remember, it’s ultimately about what’s most important to you and your mission.

2. Find charities to support. 

Once you determine the specific types of causes you want to support, start researching charities in your desired geographic location (local, national, or international) that support those causes. With the charities you discover, narrow your search using the following criteria:

  • Confirm the tax-exempt status of the charity. Use resources like Charity Navigator,, and Guide Star to check. 
  • Determine the staying power of the charity. How long have they been around?
  • Evaluate the charity’s mission, organizational focus, and specific programs to ensure they align with your mission.
  • Review the charity’s revenue stream and budget spent on actual programs to support their cause. 
  • Discover how the charity determines the outcomes and effectiveness of its programs and services. 
  • Find out if you are able to give to specific programs the charity provides. 

You might also want to determine if you can volunteer and engage directly with certain charities. Support isn’t always limited to money, and if the cause is important to you, then you may want to be involved directly in providing support. 

3. Give to the charity.  

Now that you’ve determined which specific charities to support, it’s time to actually give to the charity. Get in touch with the charity and determine who your main contact person will be. Then find out how the gift should be made – to whom a check should be made out or where to make the transaction. 

Giving by check is perhaps the most straightforward way to give, and it naturally comes without transaction fees. However, there are also ways to give online to certain charities. Before you do, though, find out if there will be any transaction fees involved. Some platforms charge a small percentage or flat fee for every transaction. There are also others that exclude transaction fees when for charitable giving. Facebook, for instance, allows you to give to charities without any fees. Paypal has a donation platform like this as well called the Paypal Giving Fund. 

Ask the charity contact what type of follow-up you will receive to confirm your gift, as well as important tax information you may need. Once you have all the relevant details needed to make your charitable gift, you can arrange for the gift to be made. 

4. Evaluate your charitable gift.

Follow up with the charity and get feedback about the impact of your donation. Ultimately, the charity’s ability to make a lasting impact and affect real change for your cause is the key reason for your gift. If the charity is unwilling to provide this kind of feedback, it is a good reason to question if they deserve your support. 

Based on the real impact of your gift, you should be able to clearly determine if the donation to the charity aligned with your mission. From there, assess your overall experience with the charity and decide whether you want to give to this charity more in the future. 

The Personal Financial Impact of Charitable Giving

Giving to charities that support your personal mission to make the world a better place is one of the most fulfilling things you can do. It also may provide a welcome tax break each year, depending on your personal financial situation. If you would like to see how charitable giving will affect your overall wealth strategy, let us know. We can help you create a plan for charitable giving that makes the most impact without costing you unnecessary financial headaches.