Montgomery County United Way encourages charity research before making a donation

MONTGOMERY COUNTY, Texas — Do you know where your charitable donations go? Are you concerned about the way they are used and the stewardship of the organization you are giving to? Economist John List at the University of Chicago says you should be. “Give from the heart, but use your head,” is the opening line of a recent blog entry posted by The Wall Street Journal.

The insightful article cites several important points to keep in mind when giving to charitable organizations. List believes that donations should be managed much like an investment portfolio. Many donors give from the heart to the charities that give them a sort of “gut feeling.” John suggests it’s not a bad thing to go with your gut but to also spread your contributions around to many organizations, so that the most good can be done.

List advises, “If you’re an investor who cares about returns, you need to treat this sector exactly the way you would when selecting your funds in your 401(k) or analyzing a company’s annual report. Above all, do your homework before you send any money.”

One of the many reasons why people choose to give to Montgomery County United Way is that they not only do extensive homework but also concentrate on and analyze the returns from their investments. Equal to their focus of providing great MCUW programs is the funding of other Montgomery County programs that are successful, reputable and align with the priorities and assessed needs of Montgomery County residents. Extensive homework, much like John List suggests, goes into each program, whether it’s an internally driven program or a community program they fund.

Program homework isn’t the only kind of research and evaluation Montgomery County United Way does. If you know anything about the United Way organization as a whole, you know that each United Way is unique and concentrates on the needs and priorities in the particular area they serve. It’s the ownership of each United Way to research, manage, fund, and successfully run their own operations. Each year, Montgomery County United Way brings together a diverse group of people with great minds and resources to continually research and assess the needs of Montgomery County. In recent years, their research has shown that the most needed priorities for Montgomery County are in education, health and wellness, and financial independence: areas in which each MCUW program has a strong focus.

Ben Appen, Chief Executive of Magnitude Capital in New York, manages $3.8 billion in portfolio hedge funds and gives actively only to charities that test the effectiveness of their programs. He says, “Whatever you can measure, you should measure.” Appen chooses to give to charities with a culture of doing more of what works and less of what doesn’t. He goes further to say that none of this means to close your heart, but by asking for proof that programs help, you improve the odds that your money will make a measurable difference in the problems you hope to alleviate.

According to John List, there are several ways to find out if a nonprofit is worth funding based on the laid out principals above. List suggests asking questions like: Exactly what are your programs trying to accomplish? Which studies and statistics demonstrate that your program is likely to succeed? What data do you collect on how satisfied your participants are with your programs? What specific measures do you use to track whether your work is succeeding? How do you follow up later with participants?

Another great way to research a nonprofit is to have a charity watchdog do the work for you. For the second year in a row, Montgomery County United Way was awarded a 4-star rating for sound fiscal management and commitment to accountability and transparency by watchdog group, Charity Navigator. According to Charity Navigator President and CEO Michael Thatcher, who presented MCUW with a letter of commendation, only 21% of the charities rated receive this distinguished honor 2 years in a row, which indicates that Montgomery County United Way “outperforms most other charities in America.”

Montgomery County United Way continually works hard to maintain its reputation of being the leader and visionary for improving lives and creating lasting change in and around Montgomery County. Whether you do your own homework and ask the questions suggested by Economist John List or read about MCUW on the Charity Navigator web site, we encourage you to find out more about the organizations you are supporting and the health of their programs.

To read the complete version of the Charity Navigator 4-star rating letter of commendation, visit www.mcuw.org/charity-navigator-status. To learn more about watchdog Charity Navigator, go to www.charitynavigator.org.