What Everyone Gets Wrong About Giving to Charity

December 20, 2015, 6:00 PM UTC
Christmas charity donation jar filled with American currency
Photograph Catherine Lane via Getty Images

The Leadership Insider network is an online community where the most thoughtful and influential people in business contribute answers to timely questions about careers and leadership. Today’s answer to the question: What’s your New Year’s resolution? is written by William Craig, founder and president of WebpageFX.

My goal, and my company’s goal, for 2016 is to build and fund a new school for impoverished youth in Ghana. ‘Now that’s an oddly specific resolution,’ you might think. Well, this resolution comes in the wake of a long process this past year, in which WebpageFX worked with the Pencils of Promise organization to build and fund a school for the children of Cunén, Guatemala.

Obviously, I believe that giving back to local and international communities is incredibly important. However, charitable contributions are also a great way to bolster company culture and team morale around the holidays or any other time of the year. Yet, many professionals aren’t quite sure of the right way to go about charitable giving. While giving to those in need is always something to be admired, there are certain considerations companies should discuss before donating. Below are two of the most important.

Vet the organizations you work with
Unfortunately, just because an organization is a nonprofit or charity doesn’t mean that 100% of your donations go to the cause you want to support. Nonprofits often need to use some of your money to keep their organizations alive and to continue fundraising. The accepted amount of money a nonprofit can use to fund their overhead usually falls around 33% of all funds donated.

See also: How to Be a Better Boss

However, some charities pocket significantly more money than they give to the cause. For example, the Kids Wish Network sparked outrage in 2013 when data revealed that the charity spent less than three cents for every dollar donated to its cause. When WebpageFX was looking for a charity to work with for FXBuilds, we decided on Pencils of Promise because absolutely 100% of donated funds go to the cause.

Think long term
Another problem that arises in charitable giving comes from overlooking the way in which current actions will impact the future. For example, consider the foreclosures that faced a number of “Extreme Makeover: Home Edition” families. Giving someone their dream home seems like one of the best possible donations in the world on the surface. But, unless that donation come with paid property taxes and upkeep funds, the families meant to be helped end up being hurt by these well-intentioned projects.

In determining how we could bring education to impoverished children in Ghana and Guatemala, WebpageFX knew simply building a school wouldn’t be enough. So, in addition to paying for the construction of a new school, our donations also fund these schools for 20 years to come. Every charitable goal has unique characteristics to consider.

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