It is a great humanitarian gesture to give. It is a way to express one’s generosity and kindness towards the less privileged and to fulfil one’s social responsibility. It is also said that there is more pleasure in giving than taking.
Donating is definitely a noble idea, but pause for a bit before parting with your hard-earned money. You need to ensure two things. One, the organization you are donating to is genuine. Two, you follow a payment option that ensures least leakage.
The right institution
So, how does one ensure that the charity organization or the non-governmental organization (NGO) one is donating to is genuine? Here, genuineness would mean that the charity has a clearly stated social objective, carries out its operations at the least cost and adopts best practices and high levels of governance and integrity.
Some institutional donors can have internal mechanism to ascertain the quality of an NGO. But, for an individual donor, it is difficult to do it himself. He has to depend on a credible third-party opinion. For such donors, there is help at hand: an organization called “Credibility Alliance”, which is “of NGOs, by NGOs and for NGOs”.
Credibility Alliance defines itself as a consortium of voluntary organizations committed towards enhancing accountability and transparency in the voluntary sector through good governance. Credibility Alliance has an eminent governing board and is managed by some well-qualified and accomplished individuals. It has a system evolved over time through a consultative process of accrediting charity organizations.
But, how does a donor use Credibility Alliance’s services? Its website gives a list of organizations which are accredited. The donor needs to simply check if a particular NGO is in the list or not.
In case the NGO is not in Credibility Alliance’s list, there is another checkpoint: Give India. This organization is a philanthropy exchange that provides a simple, technologically sophisticated and, most importantly, least expensive non-direct platform to donate to the desired NGOs. Give India arranges with corporates and other organizations for the employees to donate through salary deductions in a smooth manner to the target NGO. Give India’s website, Giveindia.org, has an alphabetical list of NGOs that are eligible to receive donations through Give India.
Another thing that donors can do is ask the NGO for its financial statements and annual report. Donors who have knowledge on financial statements can make a reasonable evaluation.
The right payment method
The process one follows to donate is also important. There are several ways through which NGOs collect donations.
Direct mailers to donors is one popular way. Under this, donors need to fill a simple form and send a cheque or a credit card authorization in a prepaid envelope. Many NGO websites have online payment options, too.
Some NGOs employ direct selling agents (DSA), who get commission on the collections. While this is not a bad option if done properly, it could be grossly misused. Often, we hear that DSAs are paid very high commissions. So, don’t give in to their lies, such as “we are volunteers” or “we don’t get anything”. Rarely is the DSA commission less than 40-50% even though they accept cheques in favour of the NGO.
The best and the most cost-effective way is to pay directly to the NGO either by sending a cheque or online. After all, as a donor, you would like to see that the maximum part of your contribution reaches the target NGO and the least amount is spent in the process of collection.
Employee donors could explore if their company has a payroll giving programme. If yes, they could join that, as it ensures maximum transparency and efficiency. If the company provides none, employees can even encourage their employers to opt for such a programme.
Lastly, donors could also try donating through ways other than money, such as devoting time and skills.
D. Thyagarajan is CEO, Carnation Consulting, and former director (ratings), Crisil Ltd. Your comments, questions and reactions are welcome at email@example.com