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How To Properly Vet Charities To Support With Michael Thatcher

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Numerous charities pop up left and right whenever a crisis arises. Although these not-for-profit organizations raise money for good causes, some only gather financial donations to feed their selfish interests. As a donor, how can you separate legitimate charities from fake ones? Michael Thatcher makes charity vetting way easier through Charity Navigator. Joining Corinna Bellizzi, he shares how their team evaluates and rates different charities across the country, helping people ensure that they are putting their hard-earned money on reputable not-for-profit organizations aligning with their values. Michael also discusses the power of charity collaboration in today’s economic market, with inflation and rising interest rates directly impacting how much donors are giving to charities.

 

About Michael Thatcher

CMBB Michael Thatcher | CharitiesMichael leads Charity Navigator in its efforts to make impactful philanthropy easier for all by increasing the breadth and depth of evaluation methodologies to facilitate ratings coverage of substantially larger numbers of charities and expand how the information engages new and existing audiences. Prior to joining Charity Navigator Michael spent more than fifteen years with Microsoft, the last ten of which, as their Public-Sector Chief Technology Officer responsible for technology policy initiatives and engagements with governments and academic leaders in Asia, the Middle-East and Africa. Michael’s eclectic background includes years at sea conducting oceanographic research with Woods Hole Oceanographic Institution, composing music and dancing internationally as the co-founder and co-director of Dance Music Light. He has held various board positions within the nonprofit and tech sector, holds several patents in enterprise systems management and has a degree in Music from Columbia University in New York. His guiding mantra: Follow your heart – Use your head – Make a difference.

 

Guest LinkedIn: https://www.linkedin.com/company/charity-navigator/

Guest Website: https://charitynavigator.org

Guest Social: https://www.instagram.com/charitynav/, https://www.facebook.com/charitynavigator, https://www.youtube.com/charitynavigator, https://twitter.com/CharityNav

 

Create Show Notes: – Raw Video

00:00 – Introduction

02:56 – A journey from music, dance, to technology

05:51 – Charity Navigator

08:45 – Different not-for-profit classifications

11:47 – Legitimate vs. Fake Not-for-profits

17:20 – How not-for-profits gain revenues

22:29 – Decline in charitable giving

28:55 – Collaborations between not-for-profits

32:49 – Factors to consider before donating to charity

41:52 – Closing words

 

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How To Properly Vet Charities To Support With Michael Thatcher

Have you ever wondered when you’re selecting a charity that you want to support, or even thinking about it, whether you’re choosing one that’s well managed and that does the work that you intend to support? On this show, every time I bring on a not-for-profit, I do quite a bit of research or legwork. I look at reviews, the good and the bad. I do Google searches like any of us do, and I connect with others in the same category, sometimes other not-for-profits to ask their thoughts about the one I’m considering supporting. In short, I vet them.

You’re always going to read from reputable charities when you’re reading this blog, charities that are doing good work, but there’s also another tool in my toolshed that I often use, and that is Charity Navigator to talk about charities, choosing those you want to support, and being sure that your dollars and time are doing the good that you are working to put into the world. I’m joined by Michael Thatcher. He leads Charity Navigator. It’s in all of its efforts to make impactful philanthropy easier for all of us. Prior to joining Charity Navigator, Michael spent more than 15 years with Microsoft and the last 10 of which as their public sector Chief Technology Officer or CTO.

Michael’s eclectic background includes years at sea, conducting oceanographic research with Woods Hole Oceanographic Institution. He’s composed music and danced internationally as the Cofounder and Codirector of Dance Music Light. He’s held various board positions within the nonprofit and tech sectors, holds several patents in enterprise systems management, and has a degree in Music from Columbia University in New York. His guiding mantra is, “Follow your heart, use your head, and make a difference.” We’re going to have a bit of an eclectic conversation as I’m curious to find out more about his interesting history. Michael Thatcher, thank you much for joining us. Welcome to the show.

Thank you. I’m happy to be here.

Before we get started, I have to know about this music, dance, to technology journey. It’s not something I would’ve necessarily imagined as much as I might like to also pursue all of these things.

It’s interesting how important our parents can be in our upbringing and in some of the choices we make in life. My mother was a musician. My father was a university professor, a mathematical modeler, and had a PhD from MIT in Ocean Engineering. The ocean and music were always a huge part of my life, and dance was something that came in a little bit later. In the same way that I cut the grass for my parents when I was a teenage boy, I also learned how to write software for my dad. It dates me a little bit, but I had that as a skillset that I developed as an adolescent. When I chose to be a musician and tried to make it as a dancer, my wife and I had a successful dance company for about ten years.

It was successful in the sense that we were performing in South America, the United States, and parts of Europe. We never made any money. The money came in through software programming. One of the niches that I found myself in, thanks to my dad, was a connection with someone who was doing Marine Geology. The first time I went out to sea for Charley Langer was to help him dig up rocks off the ocean floor on one of the volcanic ridges in the Pacific Ocean.

I fell in love with this work. I also love the concentration of it because you go to sea for 3 to 6 weeks. You couldn’t spend your money. You were working 12 hours a day and 7 days a week. You are making good over time. In a very concentrated period, I could make enough money to live off of for a couple of months. I did that on and off for about ten years until I finally signed on full-time at the Oceanographic Institute at Woods Hole Oceanographic.

I stopped dancing. I was a shipboard scientific services group technician. I was spending eight months of my year at sea. I came home from a trip one time and got the ultimatum from my wife, which was, “New job, new wife. You choose.” We ended up in Washington. From there, I eventually found my way into Microsoft and the rest led me to where I am now at Charity Navigator.

How long have you been at Charity Navigator?

It’ll be eight years in August 2023.

A lot has changed in the last many years in the tech world. I was trying to imagine a world in which you’d gone from oceanography to CTO, a powerful division within Microsoft, and understanding the culture within even that organization has shifted a lot over the years. It’s an interesting story, quite the experience, and a wild ride, I imagine.

Ultimately for me, the use of technology and particularly data, has always been something where when you think about the work I did on the ships, it was gathering data for scientists so that they could make sense of either the geology or the biology within our oceans. When I was working at Microsoft, I did enterprise systems management on the Windows team, but that was more about data collection and data management.

The public sector work I did, which was the most rewarding part of my time in the organization, was helping governments improve services to citizens, education, healthcare, extend reach, and all of this through using technology as a lever for change. Coming to Charity Navigator, I was attracted to the opportunity of trying to determine, “How can you tell if a charity is making a difference? What is their impact on the world?” There’s consistency through data collection and processing in my career. It’s a little bit hard to see, but it’s there. I care less about the technology than more about what it’s letting us do or understand.

To be an NGO or a not-for-profit, in the first place, you have to meet certain metrics. You have to do quite a bit of work to be there. However, sometimes, when we look at foundations that have been built, it’s almost like an extension of the expensive hobby of somebody that’s wealthy than creating a foundation or a company that’s funneling their money into a foundation to do good that they’re working to put into the world.

I wondered if, for a moment, we could have a discussion about the terminology in this space so the readers can get a feel for what we’re talking about. You have NGO or Non-Governmental Organizations, N4P or not-for-profit, websites with dot-orgs often that aren’t even 501(c)(3)s, being the governmental designation they get as a ratified not-for-profit. They have to share their financial filings every year. They can lose that status if they don’t do so. Let’s talk about these different branches almost of not-for-profits. How do you see each of them fitting in and what might be confusing to somebody who’s looking to vet at a specific charity?

The whole incorporation structure is fairly complex. You called out 501(c)(3), which is the classification for a working charity that has services that they’re providing to, for lack of a better word, make the world a better place, whether that’s running an animal shelter, parts of a hospital, education programs, food banks, shelters, etc. There’s a multitude of (c)(4), (c)(5), (c)(6), and all of these different classifications within the United States designate different types of nonprofits that may or may not have a tax deduction or provide services. For example, (c)(4) is more of the lobbying arms of an organization.

Think of some of the larger ones, like the Sierra Club or the NRA. They have both a (c)(3), which allows for a tax deduction through the donation, and a (c)(4), which is the lobbying arm that allows them to engage with the lobbying practice at the Federal and state level. A nuance that’s worth noting is that a 501(c)(3) cannot engage politically. They cannot lobby. That is why you would have a dual-structured organization.

CMBB Michael Thatcher | Charities
Charities: A 501(C)(3) cannot engage politically or lobby. That’s why you would have a dual-structured organization.

 

For the average individual, one of the things that we try and do at Charity Navigator is simplify some of these processes. For example, on our platform, we have a list of all available 501(c)(3) charities that it’s essentially a mirror of the IRS master file. There are about 1.6 million charities on that list. Of those, we also have ratings that we rate about 200,000 of those organizations. We allow you to give to organizations directly through our website.

One thing to be clear about, we don’t charge donors to access the website. We don’t charge charities to be rated. We don’t charge you to give through our giving basket. The only thing you’ll pay is credit-associated credit card fees. The thing where I’m getting to with this is we won’t let you give to a charity that is non-tax deductible. You’ll only be able to give to 501(c)(3) organizations. That’s one way where we take out, trying to sort through what it is and how do I make sense of it and allow you to give to working charities.

This brings up another discussion point you and I covered before we agreed to come on and schedule this time. That was the issue that many confronted with donating money to a charity called Black Lives Matter in Southern California, which is not affiliated in any way at all with Black Lives Matter, the movement. In fact, this caused some controversy because they literally received millions of dollars and had not done any corporate filings for their not-for-profit for some time.

They’ve probably lost their status by now. I don’t know exactly where we stand on that, but the real damage there is that people thought they were putting money into a specific organization that was a not-for-profit, only to find out Black Lives Matter isn’t even a not-for-profit. What do you have to say about this and how can Charity Navigator play a role in how helping people sort through the weed, get through the chaff, and ensure their dollars are doing what they want?

The situation with Black Lives Matter, the organization and go back to why did that happen. We had a crisis in our country and this was following the murder of George Floyd. That moment stimulated a lot of quick action. Other people are like, “What do I do? How do I help?” They move very quickly. What we’re trying to help you do is to keep moving quickly but make sure you’re giving to whom you want to be giving to.

One of the things that happen in any crisis is, unfortunately, there can be popups of lookalike charities, many very similar names. I’m not saying that was the case in the example you’re giving, but it happened with the war in Ukraine and the earthquake that we had in Turkey and Syria. You’ll have lookalike organizations that come online that are fraudulent. They’re trying to get your dollars because you’re moving quickly.

What we’re trying to help you do is make sure you have found the organization that you want. If you use our platform, one of the things I said before, we won’t let you give to a fake organization. We will let you give to a legitimate organization. That might be an organization that is a 501(c)(3) charity that still may not be who you thought you wanted to give to.

Look at the information. Take two seconds more to make sure that this is who I think it is. If you don’t come to a site like Charity Navigator, find out that it’s a legitimate charity before you write a check or give them your credit card information. One of the simplest ways is to ask the organization for their employee identification number. If they’re unable to give you that, it’s a little bit like someone not knowing their social security number. Don’t give them.

Thank you for clarifying that. Looking at your site, you’ve rated about 200,000 charities, but it looks like the IRS is a little behind in ratifying some of the filings. Some charities that might otherwise bear that check mark and, “They’re good,” don’t presently. What would you say to people if they’ve identified a charity they know and like and it’s not yet rated or isn’t presently on your site in that rated capacity?

There are a couple of things. There are four parts to the rating. There’s an accountability and financial part of the rating, which is automatically generated through three years of e-filing the IRS Form 990, which is the tax form that charities must file. Once we have that, we’ll automatically generate the basic rating. There are three other parts.

One is culture and community. That’s data that you can supply to candid or log onto the portal at Charity Navigator, CharityNavigator.org/portal. You put your charity’s information there. We’ll authenticate you as someone who represents that organization and you can give us additional data. That additional data makes you more discoverable on our platform and builds the basis of your rating. Culture and community, leadership, and adaptability are looking at very basic leadership skills.

Do you have a plan? What’s your strategy to achieve that plan? Finally, we’re getting to impact and results. This is a more in-depth analysis of cost per outcome within specific program service areas. You can access all this information through the portal. That’s for organizations that don’t yet have information. I encourage you to try and get as much information into the portal as possible because that makes you more discoverable to donors. The other thing is, and this is now a Federal law and went into effect in 2022, everyone has to eFile. There are reasons why one can have an exception for not eFiling. Try not to do that because e-filing makes your digital footprint more available to entities like ourselves that, in turn, lets us raise your profile.

That’s all fantastic, but it does lead me to another question, which is, as a not-for-profit yourself, how do you monetize and gain revenues? This is an incredible service you’re offering, but you also have to keep the lights on. What does that look like?

For Charity Navigator, we are a free website. We have ratings on 200,000 organizations. We don’t charge for that. That said, we do solicit. About 65% or 70% of our annual revenue comes from individual donations. That’s people using our website that find it valuable in their giving process. They’ll make a small donation at the end of the year.

Similar to how Wikipedia runs there.

It’s almost identical to that. The remaining portion of our revenue comes from some of the larger foundations that are interested in supporting nonprofit infrastructure.

You mentioned for a bit there the difference between a 501(c)(3) and 501(c)(4). We’re about to enter the presidential elections. Everybody has their eyes on donating to specific political endeavors, but these are not tax-deductible. Can you give people a brief synopsis of why that might be? In some cases, we think, “I want to support this cause. I want this company to be able to lobby on my behalf or this not-for-profit and that 501(c)(4) or arm of Sierra Club.” Why might we not be able to do that? What are your thoughts?

This goes back to the original creation of the tax code for the charitable sector, which is hundreds of years old and remained intact until 2017 when there was a revision to the tax code at that point. The decision made by our government hundreds of years ago was that if you are going to be in the charitable sector, you should not be influencing the political direction of the country or that the charities themselves could then become a vehicle for political maneuvering. That’s why it’s been kept out as. For example, as a charity ourselves, I periodically have to remind our staff, “No politicking in the office, please. This is not what your political views stay outside of the organization.”

“Put the blinders on.”

The reality is you can lose your 501(c)(3) status if you’re actively lobbying. It’s not worth it.

[bctt tweet=”You can lose your 501(C)(3) status if you actively lobby for a particular politician or political party.” via=”no”]

Is an individual that, let’s say, not an executive for the company that they’re working with, the not-for-profit in this case, allowed to lobby, or is that entering into the murky gray waters of, “Let’s not go there?”

As an individual, you’re free to do whatever your rights are as a citizen in this country. I wouldn’t go in there wearing the T-shirt from your company.

You have to have some separation. I was curious on that front because I had lobbied Congress before I’ve gone to Capitol Hill and Washington. I have been there as well doing the same on behalf of the natural products industry. I was always curious about what it would take, for instance, this show and become a 501(c)(3), and then still wanted to be able to have that political power at the same, time going and knocking on doors. It’s one of the things that has kept me from deciding to go that route because I’m like, “I’m not seeking revenues at this point,” but when I do, “I want to do what is a not-for-profit. What does that look like?” I confront this issue and go, “Maybe not.”

I’m not an attorney in this matter. I have to be careful about what I say, but it is allowed to advocate for one’s organization. When you cross the line and start lobbying for a particular candidate that’s running for office, that’s where you get yourself into a bit of trouble.

I wonder how companies like Patagonia have navigated those waters because they are active. They do have a foundation. Perhaps that’s part of it. They also have a publishing house. They’ve gone through these challenging times as well to figure out a path forward. At this point, Patagonia is such a large company as a whole that they’re able to do a lot and to have those resources at hand. Let’s talk for a moment about how the giving landscape has evolved over the years. What are the primary changes that you’ve seen?

There are a couple of things, and there’s been a release of giving data, which shows that in 2022, there was almost a 3.5% decline in donations going into the sector, or about $17 billion, which is significant. One of the more troubling trends that we’re seeing is, let’s say, in the year 2000, over 2/3 of American households gave to charity. As of 2018, less than half of US households are giving to charity at this point. A significant portion of that relates to the decline in religious giving. Giving to religions, irrespective of religion, has always been the bulk of charitable giving. It’s still close to 30% and the largest category. That has declined over the last many years. That’s one of the trends we’re seeing.

[bctt tweet=”In the early 2000s, over 2/3 of American household gave to charity. In the past several years, that number went down to half.” via=”no”]

The other shift is that there’s a decline in trust in the charitable sector. This is also troubling. It relates back to something we talked about before, which is the confusion. Sometimes the lookalikes and mistakes that are made by not doing adequate vetting have compromised faith in the sector. At the same time, there’s more faith in the charitable sector than there is in the for-profit sector and in our US government at this point. We’re still on the top of the pile, but it’s declining. Trust, in general, has declined. That’s going to be a problem for us.

As far as where people are giving, that has stayed fairly consistent. When we went through the pandemic period, there was an increase in giving to humanitarian needs and a decline in giving to the arts and to the environment, for example. There’s been a return to giving to those entities and those parts of the sector in the last years. It follows what’s happening in the world to a certain extent.

When I think about the reasons that people might not be giving as much, it’s hard to divorce that from the reality of inflation nowadays and from the fact that while our incomes might have continued to rise, the cost of living outpaced that. What people are making now as far as their disposable income is not the same as it was even decades ago.

I wonder what your thoughts are about how charities can pull their collective representation to help those that perhaps have more disposable income understand the impacts that they can make through charity. If you’re only able to get a few dollars from, let’s say, people who are on the lower tier of that, you might continue to struggle. It’s something I’ve been thinking about as we are in these unprecedented times with COVID, our political distrust, and the fallout that has spread from the political side to for-profit businesses and even not-for-profits.

There are a couple of things in what you’ve mentioned. I mentioned the 1.6 million charities. That’s a lot. The vast majority of them are tiny. The ability and the facility to collaborate, consolidate, and work together towards shared outcomes and improving different situations regardless of what they are, whether it’s shelters or food scarcity would be such an asset to our ability to make a difference. The more organizations you have, the more organizational structure and maintaining the entity that costs money. It takes away from necessarily focusing on doing good. If we could focus more on collaboration and consolidation, that would be a huge bonus for the sector itself.

The other challenge is the sense of inflation and the rise in interest rates. That affects the individual donors, but you have to extrapolate out, that also affects charities. The $100,000 in 2022 isn’t worth as much in 2023. Even if you’re still getting a big gift and the gifts remain consistent, what happens is people set their budgets on giving at certain dollar amounts, but you have to correct for inflation. As someone who’s running a charity, we made some adjustments to our employees’ salaries based on inflation because that costs us more money and we didn’t necessarily get more money.

It is a bit of a getting stuck between a rock and a hard place, but I do think it’s helping people understand that the need is still there. I also think that entities like Charity Navigator help people who have less money to give more strategically and potentially make a bigger impact with the little that they have at this time.

There’s no digging us swiftly out of these weird economic times. Having control over the little things that we can while still working to make sure that the dollars and cents that we donate are going where we want them to. You mentioned something and this answer that I want to touch back on, and that is a collaboration between not-for-profits. It’s not necessarily always consolidation, because in special cases, like, for instance, in animal rescues, there is a regional need where consolidation becomes very difficult.

One such example is Little Hill Farm, the sanctuary that my friend Helbard Alkhassadeh runs with his wife Camilla. They have had a few moments arise where suddenly, a puppy mill is found, and they got to find homes for all these puppies. In this case, since they’re working more with farm animals, it might be goats or whatever.

Now you have to figure out where all of these animals are going to live, how they’re going to be fed, how they’ll get the veterinary care they need, and everything else, which can be very expensive and come out of nowhere. Everyone in that sector has the desire to help. What they’ve essentially been able to do is collaborate with other regional animal shelters and rescues to work to quickly find solutions in place until a permanent resolution can be achieved.

It’s a powerful set of charities that are working to serve as animal rescues, whether it be for farm animals or typical pets. I do think we need to see more of that cross-collaboration and connection in other sectors as well, especially when you’re talking about providing services for food, shelter, and beyond that, the services that people might need. I’m curious to see if you see some light at the end of the tunnel when it comes to that. Are you seeing positive moves and do you have examples from which to draw?

I have some. I’ll speak more specifically about our own work at Charity Navigator, which as an infrastructure player, we seek to engage as much as we can with other infrastructure players. We need continuously updated data, as do some of the other players. For example, GuideStar by Candid is a partner organization that we work with. We share data between our organizations. In some cases, we buy data from them. We’re doing that in a way to make it easier for the working charities to get their information to our various platforms. It essentially reduces the load on the people that you’re trying to serve. They’ll make it hard for them to give you information.

That has borne fruit and has allowed us to do some of the expansion that we’ve had over the ratings in the last couple of years. The other area that I’m seeing that is the light at the end of the tunnel is that there’s a lot of focus on equity and giving with equity, particularly for smaller organizations, many of which are under fiscal sponsorship. You have some of the large foundations that are creating convenings where they’re bringing a lot of similar players together so that they can meet each other. They can start seeing where are their points of intersection. That has led to some interesting collaborations that are quite beneficial.

CMBB Michael Thatcher | Charities
Charities: There are a lot of focus now on equity and giving with equity to smaller organizations, mostly those under fiscal sponsorship. This has led to many interesting and beneficial collaborations.

 

To circle this all back to a direct question for you, and one that the Charity Navigator supports, what factors should we all be considering before we donate to an organization? Are there specific things outside of using Charity Navigator that you could point to for additional resources?

We’ve created a framework within our ratings, which is a usable framework with or without the ratings. If you think about what you’re hoping for, I would look for strong leadership, financial integrity, and transparency, “Tell me what’s going on. Show me what’s good and what’s not good.” You also want to know that there’s a theory of change or that they have a plan and what is the change that they’re trying to make in the world, and how are they achieving that?

If you can, you want to have them articulate the impact that they’re making in the world. The other thing then, and this is important, is on what knowledge are you basing your assumptions? Are you basing your work on prior research or is it pure innovation? There’s nothing wrong with pure innovation, but you want to know that they’ve done some homework in what they’re doing. In a lot of these things, we try and capture in our ratings.

The other thing is if you don’t have our ratings and framework, you can also go to Candid, which is another platform that collects data on nonprofits. You could go to BBB’s or Better Business Bureau’s Wise Giving Alliance. These are all other sources of information. The IRS and its website have all of the tax forms available there for people to download and/or review. You’ll find the tax documents a little bit difficult to read unless you’re an accountant and you love that stuff. One thing we’ve tried to do is make that simpler for you. In CharityNavigator.org, for every charity, we’ve got the information from their tax forms in a much more human-readable format.

You mentioned financial integrity. This is all connected to that, but something that I used to call a metric would be what percent of the money that they received is going to do good. I think you have a different perspective on that. I’d love to know your take.

It’s worth noting that this is a change in perspective. The only data we had was the financial information from the IRS, which very clearly delineates between program expenses, financial, fundraising expenses, and administrative expenses. For many years, folks only wanted to pay for program expenses. In other words, the actual work or the service you were paying for, whether it was the shelter, giving food, digging wells, or whatever that was. The reality is that that tells you how the organization has spent your money in that instance. It doesn’t tell you how they’re sustaining their business. Nonprofits are professional organizations that are hiring people with varying skillsets, salary needs, and requirements.

They’re trying to run a sustained business. If they’re not paying for what it takes to run a business, they’re not going to be around for very long or their staff is going to spin out of the organization on a fairly frequent basis because, at a certain point in time, they’re not able to make a living or put their kids through school. There’s a need to pay what it takes to get the work done and sustain the organizations. Our focus is on looking at what impact the organization is achieving and whether they are a healthy organization that’s going to be around and able to make an impact over the years to come.

[bctt tweet=”Not-for-profit organizations require people with varying skillets and different salary needs. If they are not paying for what it takes to run a business, they will not be around for long.” via=”no”]

I only have the experience of having worked for a couple of charities over the years. One on more of a volunteer basis, my father-in-law’s not-for-profit, the Corneal Dystrophy Foundation. I interviewed him on episode six. The other was the William James Association. I’m not even sure if the William James Association is still around, but they were based in Santa Cruz.

They sent artists to prisons to teach prisoners arts as part of their rehabilitation. In many cases, those prisoners would exit and be part of art shows and things along those lines to draw awareness to their plight and to also be part of their reform. It was a beautiful organization. I hope that they’re still around, but I was even working for them as part of my college endeavor. They got to pay me less or below minimum wage because I was getting college credit for it.

This is one of the ways in which organizations can put a lot of good into the world as an NGO or a 501(c)(3) without having to encourage such incredible expenses. To your point, often not-for-profit, these jobs get seen as, “They don’t pay well. They don’t pay as much.” People go to the for-profit sector. I’ve seen that change, in particular, through some of the larger not-for-profit organizations like Lucile Packard Foundation, or if you want to look at Goodwill Industries as a, for example, that many people are familiar with. They do pay pretty well because they acknowledge that they have to pay a living wage for the jobs that they’re having done.

They might be able to access and take care of some of their rudimentary responsibilities through volunteer hours like Lasagna Love, an organization that I also interviewed that was able to even tap on the shoulders of students at MIT to have them help write an algorithm for their work. That’s still a business. This is the part that people need to understand. A not-for-profit has a board. That board votes on certain things and makes sure that the money is well managed. You can have a treasurer, president, etc. In fact, the president can’t also be the treasurer.

There are rules in place that dictate how one of these organizations can be run to ensure its responsibility and that they’re staying the course of commitment to cause. When you say to me something like 6 million charities out there and 200,000 of which are rated, I’m sitting there thinking, “How are these even run? Do they deserve the rating of 501(c)(3) in many cases?” The answer is probably not easy to define, but part of the reason you only rate many.

We are limited by the data that we were able to receive. There’s such a large quantity. The one thing is the vast majority are quite small. They don’t file that much information. There are three different forms that get filed. There’s a postcard which is for the smallest organizations, which is literally a pulse that you send in on an annual basis to let the IRS know you’re still alive. There’s not much data other than your name, employee identification number, address, and a couple of other things.

CMBB Michael Thatcher | Charities
Charities: The vast majority of not-for-profits are actually quite small, and they don’t file that much information.

 

Here’s a 990-EZ which is a little bit more information then there’s finally the full 990. The full 990 is filed by organizations of about $200,000 in annual revenue and above. That’s a large portion of them that are below $1 million in annual revenue, but the vast majority are even less than that. It’s hard to do to provide an evaluation if you don’t have data. That makes it fairly easy to create a 501(c)(3) organization in this country.

It’s fairly easy but still a mountain of paperwork. At this point, I like to ask my guest a simple question in preparation for closing. If there’s a question that I haven’t asked that perhaps you wish I had, you could ask and answer it, or if there’s a closing thought or something else that you thought we should discuss before we wrap, I leave you the floor.

If you think about giving, it does start with the emotions. There’s something in you that either gets touched. I’ve had one person say to me once, “Causes grabbed you by the heart. It either upsets you or makes you angry, you want to do something about it.” That emotion is powerful and it’s such a great motor to do good in the world, but add a little bit of thinking and analysis to that emotional energy, then you can make a difference.

This idea that I have in terms of how I think of my own process is that I do follow my heart. My heart has led me to some of the most amazing places and opportunities in the world. You got to use your head. You’ve got to bring the two things together and then magic happens. If you can follow your heart and use your head, you will make a difference in the world. That’s something I wish everyone would do when they think about charitable giving.

Thank you so much for that closing thought. I couldn’t agree more. Aligning your passion, purpose, and thinking, all of it in one, you’ll have more impact. If that’s your professional pursuit, the same thing applies. Thank you so much for joining me.

Thank you.

To connect with Michael Thatcher, you can go directly to CharityNavigator.org and review all the charities that you’re curious about right there on the site. I hope that you’ll let me know what you think of this episode. You can leave me a voice message by tapping that microphone icon in the bottom right-hand corner or you can even send me an email note directly from the site. I’ll be happy, as always, to answer any questions that you feel we didn’t cover in this episode and even tap Michael on the shoulder too.

Thank you, readers, now and always for being a part of this show and this community because together, when we align our intentions, thoughts, and purpose, we can do so much more. We can care more. We can be better. We can even use tools like Charity Navigator to select the charities that are truly worthy of our intention and our support, ones that truly embody the mission of our hearts.

 

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  • Michael Thatcher

    Michael leads Charity Navigator in its efforts to make impactful philanthropy easier for all by increasing the breadth and depth of evaluation methodologies to facilitate ratings coverage of substantially larger numbers of charities and expand how the information engages new and existing audiences.

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