When money is donated to charity, people like to know how that money’s used—how many children were fed, how many lives saved?

Well-intentioned questions, but they’re not practical for charities to answer, writes Dean Karlan for The Wall Street Journal.

Here are two principles for donors to follow instead.

Do not ask charities what your money did.

A $100 donation may be allocated to “buying food for the food pantry,” but that doesn’t mean food was bought.

• Maybe the best investment was to hire another employee to manage food selection and delivery.
• Nonprofit management generally knows how to best invest donations to maximize benefits.  Asking for a detailed accounting on your dollar’s impact ignores the expertise of nonprofit leaders on how to optimize their programs.
• Demanding an accounting of your donation fails to let the nonprofit mange its resources when times are good and bad.  Donations decline during economic downturns and nonprofits need to save resources when times are good to use them when times are tough and the needs are the greatest.

This doesn’t mean donors should not require accountability, which takes us to the second principle.

Ask the charity what they accomplished, what impact they created.

• Demand evidence from charities on what they are accomplishing—specifically what changes they are causing to happen, not on how each dollar is spent.
• This evidence should be on the entire organization or on the projects they run as a whole.

Choose good charities to support—groups that align with your personal giving goals and have a proven track record of implementing programs well and producing positive outcomes and impact.

A good tool is Charity Navigator, which, because of its recent acquisition of ImpactMatters, rates nonprofits for impact and results.

Find out more at The Wall Street Journal.

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