How can I vet a charity to make sure my donation is being used effectively?

Choosing to give is one thing. Knowing your contribution is being used effectively is another. When you decide to support a charity, you’re not just giving money — you’re investing in a cause you care about. But how do you make sure your donation is being used wisely and having a real impact?

Through vetting.

Vetting a charity before donating can help you feel confident that your money is going where it’s needed most, and not on unnecessary admin costs or overheads.

1. Start by talking to your network.

“The people you connect with probably have similar interests... they almost do the vetting for you.”

~ Inbam

Before you start researching online, speak to people you trust. Ask friends, colleagues, or family: Which charities do you support, and why?

This step is often overlooked, but it can quickly uncover trustworthy organisations with proven impact. Your network can effectively do the early vetting for you. One donor in my community shared how they discovered a charity called Local Leaders after a friend of theirs invited them to an event. They were so inspired by the organisation’s work that they started donating the very next week!

If you’re a parent, involving your children in this early research phase can also be a great way to teach them about generosity. Encourage them to ask their peers what causes they’re interested in, or find out whether their school supports a charity through fundraisers or events.

2. Check if the charity is registered & tax-deductible.

In Australia, legitimate charities must be registered with the Australian Charities and Not-for-profits Commission (ACNC). This ensures they meet legal standards and comply with governance requirements. You can check their registration status directly on the ACNC website.

You should also look for tax-deductibility. If a charity can offer deductible gift recipient (DGR) status, your donation of $2 or more can be claimed as a tax deduction. Most registered charities will clearly state this on their website. This can make your dollar go further while also offering reassurance that the charity is operating within compliance.

3. Review the charity’s annual report & financials.

Once you’ve shortlisted a few charities, dig into their annual report. This document outlines their priorities, the communities they support, and the impact of their programs. It should provide:

●      Clarity around what their programs actually do.

●      Tangible outcomes (e.g. number of people helped, projects completed).

●      Budget allocations and spending priorities.

Next, scan their financial statements. A key figure to assess is how much of their budget is spent on administration and fundraising. As a general rule, highly efficient charities spend less than 20% on these overheads.

However, context matters. Smaller or newer organisations often have higher admin costs early on — that’s to be expected! What’s important is the direction of change — for example, if admin costs were 40% last year and are down to 30% this year, that probably indicates an organisation moving toward greater efficiency.

Finally, check if the charity receives government grants or foundation funding. Some charities cover their admin costs through external grants, meaning 100% of your donation goes directly to their programs. This is an excellent sign of financial health and operational leverage.

4. Read reviews and seek feedback from other donors

First-hand information often provides a more nuanced picture than any website.

Charity review platforms such as GiveWell, Charity Navigator, or even Google Reviews can provide valuable insight into a charity’s transparency, leadership, and effectiveness. Better yet, speak directly to someone who’s already supporting the charity. They may be able to tell you how responsive the charity is, what kind of updates or communication they receive, and whether the charity delivers on its promises.

5. Reach out and ask questions

Good, honest charities welcome engagement. You can contact them directly and ask about how success is measured, how you can stay updated, find out about upcoming events, and find out how you can get more involved (if that’s an area you’re interested in).

“A good charity will respond to the level of interaction you want... they’re never in your face, they just make it a pleasant relationship.”

~ Inbam

Some larger charities like World Vision may even assign you a relationship manager — especially if you donate regularly or at a higher level. These managers are your direct line to updates, event invitations, and deeper insight into the charity’s work. This organisation also offers a portal where donors can log in to view updates about the children or communities they sponsor, write letters, and track ongoing progress. Donor days are another opportunity to connect, where supporters hear stories directly from program staff and learn about broader initiatives.

Smaller organisations, such as Local Leaders, may not have dedicated donor teams, but many still offer meaningful ways to connect — like state-based coordinators who tailor communication to your preferred level of involvement.

6. Evaluate clarity of communication & impact reporting.

Whether it’s through the charity’s website, emails, newsletters, reports, — however they get their info to you — transparency is key. A well-run charity should clearly outline:

1. What they do.

2. How they do it.

3. Who benefits.

4. What results have been achieved.

   
   

If you can’t find it — or if the language is consistently vague — that may be a red flag.

One donor we worked with recalled supporting a smaller charity that helped provide temporary beds for people experiencing homelessness. After some time, they felt the charity’s communication was vague, and its impact didn’t seem to align with the amount of money raised. This lack of clarity led them to discontinue support.

7. Monitor ongoing impact after you donate.

Your relationship with a charity doesn’t end after you give. Subscribe to their updates, attend events, and stay engaged. Responsible charities will report back on how donations were used and the results they’ve achieved.

“You want to see what they’re actually doing, how much they’re doing, and whether that aligns with the money being raised.”

~ Inbam

Whether it’s through emails, online dashboards, or donor events, ongoing transparency builds trust and helps you feel part of a broader movement — not just a transaction.

8. Know what red flags to watch for

While many charities are doing great work, there are still signs to look out for that may indicate your donation won’t have the impact you intend. Some warning signs to keep an eye on include:

●      Overly high administration or fundraising costs, particularly if these figures aren’t improving over time. While some overhead is necessary, consistently high percentages can suggest inefficiencies.

●      Vague or inconsistent communication about what the charity actually does, how it operates, or what kind of results it's achieving.

●      Minimal or unclear results, especially if the charity has been operating for several years. If it’s difficult to understand where your money is going or what it’s helping to accomplish, that’s a concern.

●      Lack of independent oversight, such as no board of directors, no external audits, or little to no governance structure.

If you're unsure about a charity, don’t be afraid to walk away. If there are enough green flags elsewhere, it’s often better to invest in causes where you can clearly see the impact. And, your giving will feel better.

 

The takeaway? Your contribution matters, and you deserve to know where it’s going.

You don’t need to be a major donor to expect good communication and clear results. Giving should feel good — and informed giving feels even better. By taking the time to vet a charity, you’ll increase your chances of supporting organisations that are transparent, efficient, and truly making a difference.

Whether you give $20 or $2,000, your contribution matters — and you have every right to ask where it’s going.

 

Need help choosing the right charity?

Vetting a charity can be time consuming and feel overwhelming. We help clients make informed giving decisions by reviewing financials, assessing impact, and identifying organisations that align with your values and goals.

Whether you're giving for the first time or reviewing your ongoing contributions, we can support you in making your generosity go further.

Talk to Precision Financial about how to give with clarity, confidence, and purpose.