When deciding where to give, we all want to be sure that our donations are doing the most good. But how? With so many worthy non-profits around the world, it can be overwhelming to choose and check that you are giving to a trustworthy, impactful charity. You might decide to give only to the large, internationally recognized charities, but unfortunately this means smaller charities in your local community will miss out on much-needed support. Vetting and verifying is crucial to understand where your money is going and maximise your social impact.
To pull the curtain back on this important topic, Alaya’s NGO Partnerships Manager Grégoire von Blon shares his perspective on how to verify charities to maximise the impact of your donations. With a background in International Relations, Grégoire is passionate about helping impactful, lesser-known projects get the support they need to reach as many people as possible.
Why is it important for companies to assess the charities they support?
Companies that engage in a Corporate Social Responsibility (CSR) program that includes donating to charities want their money to be well-spent. They face two challenges in that regard:
- Generating a positive, sustainable, and measurable impact.
- Avoiding the potential repercussions of supporting a project that turns out to have a negative effect, or gets caught up in a scandal.
Vetting charities, while time-consuming, is critical to managing these risks.
What are the different ways of vetting charities?
Registration with a national administration
A number of countries have national or regional administrations that establish criteria for tax exemption eligibility, such as the “exoneration fiscale” from cantonal tax authorities in Switzerland, or “intérêt général” in France You can look up a charity’s registration number in the database to check that it is registered and valid.
This method is relatively quick and useful, as you can also access tax deduction eligibility for your company. However, this is entirely reliant on the national administration’s standards and considering that every country has its own rules for eligibility and enforcement, this might not be aligned with or sufficient for your company. In countries where no such database exists, companies need to find another way of verifying charities.
Standards and third party certification
There are numerous standards for charities to comply with and charities can also get certified by a third party to demonstrate their legitimacy. The standards and certification bodies, such as ZEWO (Switzerland) and Don en Confiance (France), assess charities to hold them accountable to their standards, including the self-sustainability of a project, involvement of local communities, and evaluation of local and cultural realities in the decision-making process. The best practises and certification bodies are a reliable option, but it’s important to vet the vetter too.
This approach consists of sending assessors directly in the field to evaluate a charity’s activities and conduct interviews with beneficiaries. This is repeated after a given time period.
While an effective tool for first-hand impact monitoring, this is also the most costly and time-consuming method (and flying from charity to charity would contribute to a whole lot of carbon emissions).
Sometimes, an existing charity partner can refer another charity to your organisation. When you have a strong network of engaged charity partners, this can facilitate the process as they can recommend other charities that operate with similar rigor and legitimacy. Peer referral is helpful, when supplemented by other verification methods, as it allows you to get eyes in the field. But you need to have a strong network of partners around the world.
This is most widely used in grantmaking. It involves analyzing the organisation as a whole, its mission, structure, governance, processes, as well as its funding sources and expenses. While time-consuming, this is useful to evaluate a charity’s decision-making, the horizontality of its management, and the extent to which staff is controlled by the board.
Impact report monitoring
This focuses on the projects managed by the charity and their impact on the targeted community. It consists of analyzing reports and financial statements to gather information on how the charity identifies an issue, generates solutions, the way they implement them, and their efforts to monitor their effects. Some charities provide qualitative insights in their impact reports that show pictures and testimonials of their actions. If a company prefers or has the resources to verify charities in-house, the impact report monitoring method is an effective way to vet charities. Alternatively, certification bodies often adopt this approach in their assessments.
Now that we have an idea of the different ways to vet charities, how can companies like yours decide which is best for you and how can Alaya help? Check out part two of this post to find out.