September 28, 2006 | Read Time: 1 minute
PRESS CLIPPINGS
Charity can turn ugly if donors feel their money is being misused or wasted, but that is less likely to happen if donors take action to ensure their gifts are spent in accordance with their wishes, Kiplinger’s magazine advises in its October issue.
To avoid unpleasant surprises, potential donors should do their homework and be certain to look at an organization’s financial statements. The situation is different from charity to charity — museums will always have higher overhead costs than soup kitchens — but if a group spends more than 25 percent of its budget on administration, donors should be wary, the magazine says.
In addition, donors need to make sure they know the organization they are supporting. The magazine urges potential donors, when making large gifts, to get to know the board of directors and seek out other donors to ask about their experiences with the organization.
The magazine says in some cases it is wise to put down conditions in writing and hire a lawyer to draft documents to detail exactly how an institution should spend a gift.
But there’s such a thing as having too much control, too. The magazine warns that every added stipulation only drives up administrative costs because institutions have to prove they have complied with a donor’s wishes.
