Avoiding Nonprofit Frauds

Tonya wants to know how you trust giving large sums of money to nonprofit organizations when there’s so much fraud. Dave talks about how he handles it.

QUESTION: Tonya in Arizona from MyTotalMoneyMakeover.com wants to know how you trust giving large sums of money to nonprofit organizations when there’s so much fraud. Dave talks about how he handles it.

ANSWER: When I’m giving a large sum, the way I look at it is as if I were investing a large sum, because I am on God’s behalf. He has called me to be a good manager for Him. If I hired one of the managers in my firm, and my job was to give money to help others, how would they do their job well? In business, we call it due diligence, meaning we dig into the investment; we know what’s going on there.

I’ve got a good friend of mine that’s a billionaire who does giving. He says he looks at several things. A few of them that come to mind that I remember him mentioning are he wants to see that the ministry has strong leadership—that it’s operated well. The people involved have what’s known as a clue.

Number two, he obviously wants to see that the cause is valid.

Number three is he wants to see that a large percentage of the dollars—the vast majority of the dollars—are actually spent on the help that the ministry is giving versus the staff and the administration and the overhead. Sometimes, things get confused, and $.90 of every dollar is operating on overhead. There was a big article on United Way a few years ago saying that a huge percentage of their money was covering overhead.

Then they get into the actual operation of the thing, and one of the other things he mentioned is that he wants to study the longevity of it, meaning he doesn’t often put a large sum in a start-up. Most of the time, he puts a large sum in something that’s been operating for years and therefore will likely continue to operate for years. You want to cause something to continue; that’s his statement. Obviously, there are exceptions to that, and when you feel like in prayer, God told you to do something, well, you do that. Shut up.

That’s a great question, and those are the kinds of things Sharon and I look at when we decide what we’re going to give to. We don’t mind giving smaller amounts to situations where someone is starting or we’re not sure about their leadership or something along those lines. By and large, it’s just like investing in a business. I want to know that the players are strong. If you wouldn’t invest in that business, then don’t invest God’s money in that deal. We are called to be good managers even in our giving.

It requires work and due diligence to be a quality and efficient giver—to be a responsible giver.

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