Four Simple Questions to Ask before Donating in Ecuador

Adapted from Charity Navigators “Questions to Ask Charities before Donating”

Now that you are familiar with the different types of social organizations in Ecuador, it is time to get informed about what you should be asking to vet organizations. Overall, the more open and forthcoming an organization is with their answers, versus avoiding or getting defensive, indicates a good possibility that the Charity you are vetting is trustworthy.  Honest organizations have nothing to hide and are happy to be asked questions and to share their mission, financials, and impact with their donors!  Below are four questions you should ask before donating in Ecuador along with the corresponding answers.

1. Ask for their Social Registration Number.

stamp f approval

If they can provide you with their registration number, you can be assured that you are dealing with a legalized and registered institution in Ecuador.This means that your donation is being solicited legally and in compliance with Ecuadorian law.

With this number you will be able to verify what type of organization it is here.  Once you know the type of social organization you can match what they are doing or raising money for with what they are legally allowed to do according to Ecuadorian law. If these two don’t match up, there is a chance they are operating outside of their legally-defined terms.

If an organization cannot provide a registration number at all, there is a good chance they are not legally registered in Ecuador. This means they are not complying with any Ecuadorian regulatory body. In this case it is also possible that the Ecuadorian government could seize the money that was raised by the organization as they would have no legal proof according to Ecuadorian law that the funds raised were  for the benefit of Ecuadorians.

What if the organization I want to donate to is legally registered outside of Ecuador, but is raising money for Ecuadorians and local projects, should I still donate?

If an organization is legally registered outside of Ecuador (like in the U.S. for example) that simply means that they are legal within that country (U.S.) and comply within that country’s (U.S) legal rules, and not necessarily with Ecuadorian law. This means there is still a chance that the Ecuadorian government could intervene if the organization is collecting and using donor funds within the country, but operates without Ecuadorian registration. This is because the money raised by a legal, outside organization is not being overseen by Ecuadorian authorities once it is put into execution, and it lacks the Ecuadorian oversight to prove that the money raised is, in fact, for the benefit of Ecuadorians. 

The best option for charities that are legal elsewhere is to partner with a legal organization in Ecuador or pursue their own legal status within the country where they are delivering their services (in this case Ecuador). A great example of a registered American Charity who is doing this is Helping Kids in Ecuador who partners with many local Ecuadoran Charities to execute their mission. 

SUIOS

 

2. Ask to hear about their Mission.

What you are looking for here is an alignment between what a charity says they do, what they are asking your help to do and how much time & money is actually spent achieving these goals.

Is the charity actually doing the things it tells you about in its solicitations for donations? Following a “truth in advertising” principle, look for signs that the charity dedicates both money and staff time in ways that are consistent with what their stated mission is and with how they represent themselves when seeking donations.

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3. Ask how they plan to achieve their goals and make an impact.

Logic and plausibility reigns supreme here.  Does the charity clearly explain what the problem is it intends to address and how it will do so? An organization should be able to explain: how their work leads to results, how much work is required to produce results and evidence or data that demonstrates the work they are doing is, in fact, producing the desired result.

If an organization says the problem they wish to change is child hunger but offers services only to help mothers to find jobs and indicates success by how many mothers keep a job for six months, the program philosophy is inconsistent and will not, in fact, logically or plausibly eradicate child hunger.

You want to go beyond heartwarming storytelling and get at the quality and depth of the charity’s work (for example, not just whether someone got a job but for how long). Look for charities that measure their performance and report on it to their donors. If an organization doesn’t meet the targets they have set for themselves, they should at least be showing how they’re adapting and learning from previous efforts, and are improving the services they provide.

impact-chain

 

4. Ask to see some Financials.

A legal organization should be able to show you some form of financials. In fact legal, social organizations in Ecuador are required to submit their books to the Ecuadorian IRS (SRI). The best financial statements to look over are ones that have been audited by a third party.

If these aren’t available, they should be able to show you, at the very least, the funding allocated to their largest programs or projects.  You should also determine if the funding allocation seems properly aligned with the Charity’s mission. If an organization that helps kids learn to read is spending a large percentage of donations on children’s nutrition, it shows a poor alignment of financials and mission.

 

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