Business forum: Boosting your charitable giving IQ

Several years ago, Donna Stelmaszewski collected a year's worth of charitable solicitations — 1,430 in all — that had cascaded through the mail slot in her northeast Minneapolis home.

In addition to heart, cancer, disaster and religious appeals, the letters pleaded for help to buy crafts for hospitalized veterans, feed blind campers and make driving "a prayerful act."

Some came with gifts — chances to win a car, offers of spruce trees and enough address labels that "I could paper my whole house," Stelmaszewski said in 2005.

No doubt, charitable giving is big business. According to the latest statistics, American individuals, businesses and foundations gave an estimated $298 billion in 2011 to 1.4 million organizations ranging from religious to education, disaster relief, social services, health causes, culture, United Ways and more.

Donors often feel overwhelmed. Some commentators have complained recently that it's hard to find a good charity, that watchdog agencies don't tell you much and that asking about a charity's overhead is a fool's game. They are wrong.

Now — with the tornadoes in Oklahoma and the shootings in Newtown, Conn., among other catastrophes tugging at our heartstrings — it seems like a good time to suggest a basic five-point strategy for charitable giving:

Follow your passions. Religious congregations and other nonprofits doing good work are easy to find, locally and nationally. Focus on causes you really care about — not just organizations with good-sounding names, but with evaluations that show effectiveness and missions that fit your values. You could choose direct services to the needy, for example, or "upstream" work to fight root causes of poverty. Direct aid to patients or contributions to medical research. You get the idea.

Perhaps you can make a difference by giving where everybody else isn't. Good-hearted Americans will give hugely to an immediate need, but we sometimes ignore the ongoing work that makes established groups effective. Unrestricted donations are especially valuable. A few substantial gifts might mean more than many scattered donations. Increase year-to-year giving with inflation.

Follow the money. As former National Public Radio CEO Ken Stern wrote recently, low overhead won't ensure quality or effectiveness and those sometimes are hard to judge. But it's fair to ask how your money will be spent. A nonprofit's track record can indicate its capacity to do the work. Screen out groups that spend inordinately on fund­raising, excessive salaries or "public education" about problems that are well-known. Or don't spend enough on management to ensure a quality operation.

For example, paid telephone campaigns are costly. New York's attorney general reported in December that charities got less than 39 percent of $240 million raised in 602 telemarketing campaigns in 2011. Special events like golf tournaments and long-distance bike rides, while publicizing a charity, can be logistically expensive.

It's ideal for established charities to use 10 to 30 percent of expenditures for fundraising and administration, according to the Charities Review Council. The council is a St. Paul-based nonprofit evaluator that Stelmaszewski consulted in giving to about 20 charities a year. Many reputable charities easily meet that spending standard.

Follow common sense. Don't be wedded to year-end giving. Hungry kids are home more in summer, for example. Write checks for school causes instead of buying merchandise you don't want.

Generally money is better than goods, unless you know that a charity such as a food shelf can use commodities. Officials in Newtown were so overwhelmed that they asked would-be donors to stop sending teddy bears, dolls and other gifts.

Volunteer. Working inside an organization, for even a few hours, can give value beyond money. Volunteering should give you a better idea of a charity's operations, effectiveness and needs — and give you personal satisfaction beyond donations.

Stelmaszewski, a retired laser welder, knew that. In addition to giving, she found satisfaction volunteering at Catholic care institutions.

About the author: Robert Franklin reported on nonprofits for the Star Tribune for more than 20 years. Now retired, he volunteers for ThreeSixty Journalism, a youth program at the University of St. Thomas.