How to choose a charity that really delivers

Studies show that Americans are the most charitable people in the world, but a change to charitable deductions may reduce the overall amount given to charity by billions. Charity Navigator's CEO Ken Berger explains how to choose a charity which provides the best giving value per dollar.

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JOHN LARSON: And now to a topic on the minds of many this time of year: charitable giving. Studies show that Americans are among the most generous in the world, but donations are partially fueled by tax deductions. And for some time now, there’s been talk about capping those deductions. For more about all of this, we are joined now by Ken Berger. He’s the CEO of Charity Navigator, which rates how effective charities are at actually getting donations to those in need. Ken, thanks so much for joining us.

KEN BERGER: Thank you for having me.

JOHN LARSON: First of all, that cap on deductions, it’s not the law of the land yet, but if it should become law, what do you anticipate the effect would be?

KEN BERGER: Well, there’s some debate on that, but essentially, billions of dollars less will be given to charity, most likely. The percent of the overall is in question, but certainly billions of dollars less would be given to charity.

JOHN LARSON: Now we were talking beforehand, you said about $300 billion a year Americans are giving to charity in one form or another.

KEN BERGER: Right, through private contributions. That also includes foundations and corporations.

JOHN LARSON: And a huge amount of that is happening this weekend or this month.

KEN BERGER: Yes, by far, the most giving happens the last month of the year and even the last day of the year is by far the day where the most giving occurs, and that’s the last day before the taxes, uh, you know, the impact of the taxes occur. So, it indicates it taxes are certainly a factor.

JOHN LARSON: So, if people are sitting down and trying to make a smart decision about – about where to give some of the resources, what do you advise them?

KEN BERGER: We think there are three critical things to consider. One is the finances of the organization. Is it managed well financially? Second, the governance of the organization. Does it have an independent board that has the skills to really lead the organization? It’s not just the CEO, you need that board in charge. And thirdly, and most importantly, the results. Is it truly meeting its mission and does it have data to show, in a measurable way, that it’s really helping people?

JOHN BERGER: All of that sounds like a difficult research project. How can people figure that out?

KEN BERGER: Well, that’s why we were created, to – to try to succinctly, through a star ratings system, uh, reflect back that kind of information, ‘cause it’s true that most Americans only give about 15, 20 minutes to their decision-making, and so to try to have that information available from experts that cull the data, uh, is the way that we’re try to, uh, help with that.

JOHN LARSON: I was saying in the introduction how Americans are among the most charitable. First of all, are we the most or aren’t we?

KEN BERGER: Depends on how you look at it. If it’s just charitable dollars, absolutely, by far, two to three times more generous than any other country. But if you include also taxes that are used for social programs, like for the mentally ill, for the homeless, uh, there are countries in Europe that are more generous and, uh, so, when you include that, no, we’re not.

JOHN LARSON: And the very wealthy in this country by far give the bulk of charitable giving, and yet you were saying earlier, um, when we were speaking before the interview, that the – that the poorest among us, uh, sort of pound for pound are actually more charitable.

KEN BERGER: As a percent of income, the working poor are the most generous, far more than, uh, middle-class or upper-class. But for dollar value, the wealthy give about 70% of all the private contributions.

JOHN LARSON: Ken Berger, CEO of Charity Navigator, thanks so much for joining us today.

KEN BERGER: Thank you.