Top 5 mistakes to avoid while donating to NGOs

Donating to charity is a great way to lend a helping hand to those in need and doing your bit towards developing a better society. However, for a meaningful contribution to be created, it is imperative that the donation reaches the right place. While you may make well-intentioned donations, it is essential to carry out certain preliminary due diligence before facilitating a donation.

Based on our years of experience working with donors (including HNIs, UHNIs, Corporates, Foundations, Retail donors), we’d like to offer tips on how to make the most of your donation by avoiding these five common donor mistakes:

1) Basic research on NGO credentials

Many of us give to NGOs on the recommendation of people in our network or because we recognize the NGO on account of their active presence on social media (oftentimes as a result of the huge advertisement costs they incur for promotion). However, chances are very high that even your friends may have not done a verification check on the NGOs.

A good starting point would be to check the whether the NGO has necessary legal documents in place such as 80G and 12A Registration, FCRA, PAN, etc. Most NGOs display this information on their websites and Annual Reports. It is not uncommon for NGOs to lose their registration status or be ‘blacklisted’ because they have been found guilty of violations. You surely wouldn’t want your money to reach in the hands of someone with a dubious track record.

It would also be a good idea to visit the location and witness first-hand the activities carried out, if the NGO is local.

2) Need Assessment

One of the top mistakes people make when donating is assuming that any help is good help or assuming an NGO wants any item you donate. A good way to fix this would be to ask questions to get a clearer understanding of some key points like:

–  What’s the immediate need?

– Where are my funds going to be utilised?

– Can I contribute by way of skills or time?

– What is the future sustainability plan?

You should view your philanthropic activities as a journey and not a destination and prepare accordingly.

3) Failing to check % spent on beneficiaries

You may make a donation in good faith under the impression that the funds are going to be utilized for the cause for which you have donated. But have you ever pondered as to where exactly is your money being utilised? How does the NGO meet its administration, overhead, and fundraising cost? We have seen Audit Reports of some of the most ‘credible and transparent NGOs’, that assure you that 100% of your donation will go towards your favoured cause, spend as high as 30% on overheads! Most donors never get into verifying these level of details.

At HelpYourNGO, we have devised a unique methodology that calculates how much % of your donation is spent directly on the cause for which you have donated and how much is overheads. Donors find this tool extremely useful in making donation decisions. Needless to say, a high % spent on beneficiary gives greater comfort to donors in terms of end utilization of their donation.

4) Emotional Donation

Are you someone who feels deeply about other people’s troubles and decide to take matters in your own hands by loosening your purse strings? Then this one is for you.

While there’s much good about donating to causes that move you, there’s so much that can go wrong in it, too. Rarely does any good come out from impulsive decisions. When your heart out powers your brain, you end up donating without doing your homework on the NGO. What if you accidentally end up giving money to a scam? Emotionally driven donation often end up as over-donation leading to budget constraints that may hamper future giving.

5) Hidden charges

A popular way to raise funds from the masses is Crowdfunding. It is a practice of raising funds for a specific purpose where the fundraiser collects money from a large number of people via online platforms. Classic example of several drops of water forming an ocean.

Crowdfunding has been a huge blessing for the social sector as it enables pooling of resources for a common objective (usually short-term, specific, timeline driven). As a result of this popularity, several Crowdfunding platforms have emerged which act as aggregators to raise funds. And for this service, they charge a ‘nominal’ fee.

This fee could range from 2% to upto 15%! Most donors tend to miss out on reading the fine print mentioning the platform charges. While it is necessary for the portal to retain a small fee to meet its operating cost and payment gateway charges, the fee must justify the efforts involved!

So the next time you feel an urge to click the ‘donate’ button on reading a plea for funds via a fundraiser, do step back and zoom in the screen to check the platform fee.

Many NGOs in India are fully dependent on the donations coming from generous donors, often individual donors. Hence, it is important to find ways to limit donation mistakes and ensure the best programs and NGOs get as much support as possible to scale their work.