11/27/2012 09:54 am ET Updated Jan 27, 2013

Giving Smarter on #GivingTuesday

I am excited to participate in #GivingTuesday – an undertaking to incentivize ways to give more, give smarter, and celebrate the great American spirit of contribution around the year-end holidays.  Already retailers, charities, individuals and families have signed onto this movement with plans to donate and volunteer.  All this energy is likely to boost year-end donations, which in a typical year exceed three quarters of a billion dollars.  But all the generosity and excitement created by the #GivingTuesday movement will amount to little lasting change unless donors take the time to ensure their gifts of time and money are directed towards the most efficient, ethical and effective charities.

So, how do donors decide which of the 1 million charities in existence are deserving of their goodwill? My colleagues and I at Charity Navigator, where we evaluate thousands of charities annually, believe you need to check three aspects of a charity’s performance before you invest your hard-earned money. Those steps are:

  1. Check the charity’s Financial Health - It is important to seek out fiscally responsible charities as they are more efficient with donations and have greater flexibility to pursue their goals. Specifically, look for charities that devote the majority of their resources to their programs and that are growing. They also should have money saved for a “rainy day”. In other words, if there is something urgent that requires them to access funds before they can raise them (such as a disaster like Superstorm Sandy).

    At Charity Navigator our professional analysts have done the work for you by rating charities on 7 different financial performance metrics and translating that into an easy to comprehend star rating system. So visit our free site and save yourself a lot of time on this step.

  2. Examine the charity’s Accountability & Transparency - Charities that follow good governance and transparency practices – such as posting their financial documents online, having at least 5 independent voting board members, and implementing a whistleblower policy - are less likely to engage in unethical or irresponsible activities. So, the risk that such charities would misuse donations is lower than for charities that don't adopt such practices.

    As with the financial review, our team has developed a robust rating system – with 17 metrics - to measure a charity’s commitment to accountability & transparency. And we boil that analysis down to a star rating to help you quickly determine if a charity is following best practices and worthy of your support.

  3. Review the charity’s Results Reporting – Look beyond inspirational storytelling/anecdotes and seek out evidence of the charity’s results. How? It can involve reviewing the charity’s website, talking with staff or even volunteering to see the organization’s impact first-hand. As you explore a charity’s results, remember to look for more than the number of activities or people served and ask for information on the quality and depth of the charity’s results. For example, you don’t want to just know how many people got a job as a result of the charity’s programs, but also how long they stay in the job.

    While Charity Navigator doesn’t offer this information today, we have plans to do so in the very near future. Even though it requires some work on your part until we add this component to our analysis, don’t skip this critical step.  After all, the charity’s ability to bring about long lasting and meaningful change in the world should be the key reason for your donation of time or money.

By following these three steps, you’ll be able to vet charities and get to the more gratifying aspect of the #GivingTuesday challenge – the part where you roll up your sleeves to volunteer or to make a donation.

This blog is part of our #GivingTuesday series, produced by The Huffington Post and the teams atInterAction92nd Street Y, United Nations Foundation, and others. Following Black Friday and Cyber Monday, #GivingTuesday -- which takes place for the first time on Tuesday, November 27 -- is a movement intended to open the holiday season on a philanthropic note. Go to www.givingtuesday.orgto learn more and get involved.