Like you last weekend I sat glued to my TV watching the scenes unfold across Japan. I saw the water rush across the countryside, sweeping away homes, cars, businesses and people. The devastation seems astronomical, and unless you lived through Hurricane Katrina is probably hard to imagine.

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While it may be hard for many Americans to conceive what the Japanese people are going through right now it has not stopped us from wanting to help. In times of crisis Americans are always willing to give to the best of their abilities. After the attacks of September 11th, Americans donated over $2 billion. When the tsunami devastated Southeast Asia the day after Christmas in 2004, Americans opened up their wallets once more donating $1.54 billion. Even more impressive was how we responded to the victims of Hurricane Katrina. Americans gave $6.5 billion, breaking all previous records of disaster related giving.

Americans and people all over the world will be donating money to help Japan rebuild. I know I will be. What I want to make sure is that any money I donate is going to the right place. I don’t want to donate my money and have it go to paying the salaries of the charity’s high level employees or to another cause. So I did a little digging to find out which charities are best. In the process I discovered a slew of information about charitable organizations that will help me decide which charities to give my money to in the future. I thought I’d pass the information on to you to help you choose between charities.

The first thing to look for is that the organization you plan to donate to is a registered public IRS-approved nonprofit charity. For one thing it means that you can take a tax deduction for the donation. Organizations that do not achieve 501 (c) status generally can’t be written off. All charities with this status will make it abundantly clear in writing; avoid ones that do not list this information.

A lot of fly by night organizations pop up when a natural disaster occurs to solicit money. Avoid ones created specifically to help with that particular new crisis, these are the most likely to be a scam. Furthermore, make sure the charity you are donating to isn’t relatively new. Even if they are legitimate they may have a hard time coordinating relief efforts in countries outside their comfort zones and lack the proper infrastructure to deal with it.

The next thing you should do is look for the charity’s mission statement. This information should be written somewhere, on a brochure or their website. Make sure their mission related activities are in line with yours before donating. You don’t want to donate to a dog rescue organization and then find out they euthanize animals they can’t place.

You will also want to make sure the charity you choose are acting financially prudent with your money. The best run charities keep their operating and administrative costs to just a quarter of their overall budget, spending at least 75% on the programs and services they exist to provide. A good way to find this out is to ask for a charities latest annual report or impact assessment report.  Avoid charities that are vague or do not supply this information. Good charities embrace these types of questions and requests; they do not run away from them. Charities that spend more than 33% of their budget on salaries and operational costs should be viewed as inefficient and poorly run.

In those cases you can’t even be sure your money is going to relief efforts instead of paying the CEO’s salary. To avoid this designate how you would like your funds to be spent. This will ensure your donation is being used as you see fit. When you make out a check to a charity, write the relief efforts name in the memo section of the check. If you are donating online, check the appropriate box to designate where your money is being spent.

It also matters how you receive solicitations to donate. Never donate over the phone. Some charities outsource their fundraising to external telemarketing companies. These companies receive a percentage of the money they collect as payment for their services. Ask any solicitor if they are directly employed by the charity and how much of your donation would go directly to the charity. Your best bet is to ask them to mail you information about the charity. This way you can cut them out and ensure your money is going to the cause instead of a telemarketing company.

When donating online make sure you are doing so through a secure website. Look for webpage with an https address rather than http. You can also look for icons such as a padlock or unbroken key in the right hand corner of the web page to ensure you are donating through a secure connection.

Any solicitor that uses high pressure tactics to get you to donate should be rejected. A common tactic is to thank you for a previous donation and ask for your continued support. If you don’t remember previously donating money to a company or particular cause, do not do so this time.  Legitimate charities do not need to coerce people into donating.

Collecting all this information can be hard to do. That’s why I like CharityNavigator.com. The site (which is itself a tax-exempt charity) independently evaluates and rates all different types of charities. They rate over 5,500 charities based on financial health, transparency and accountability.

Charity Navigator can help you research a specific charity you are interested in donating to. It will also provide you with evaluations of charities in the same category you are looking in so you can compare. Or you can browse their many lists of reputable charities. They supply lists of celebrity related charities, relatively unknown but reputable charities, 4 star and highly rated charities, inefficiently run charities, the lists go on and on. The only downside I can tell about this website is that you can’t use it to find out about smaller local charities.

You might be surprised at what you learn about your favorite charities. A little bit of extra effort to find out about the financial health and effectiveness of any charity you’re interested in donating to can impact how willing you are to pull out your checkbook.

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Keeping Money in Your Pocket,

Nancy Patterson