When Jeremiah the prophet was frustrated with the people of his hometown for tormenting him, he cursed them as follows (Jer. 18:23):
ואתה ה' ידעת את כל עצתם עלי למות אל תכפר על עונם וחטאתם מלפניך אל תמחי והיו (ויהיו) מכשלים לפניך בעת אפך עשה בהם.The Gemara (Bava Basra 9b) asks what the last part of this curse means -- "let them be tripped up before you". Rabbah explains that Jeremiah asked God that when these people decided to give charity, God should "trip them up" and have them give to people who do not need charity. This, evidently, would undermine the act. While they might have thought that they would be giving charity, in fact they would be giving money to someone who does not need it, which is not a mitzvah.
Yet you, O Lord, know all their plotting to kill me. Do not forgive their iniquity, do not blot out their sin from your sight. Let them be tripped up before you; deal with them while you are angry.
Because of this, the halakhah is that before one gives charity to someone, he must verify that this person actually needs the charity. Otherwise, there is no mitzvah. The Shulchan Arukh (Yoreh De'ah 251:10) writes that if someone comes and asks for food (or money for food), then we give it to him immediately because it is a matter of life and death. But if he comes for clothing (or anything else), we must verify that he truly needs the money.
Just last week, R. Shlomo Aviner sent out the following question and answer:
Question: When I visit the Kotel, there are so many people asking for money, should I give money to the beggars? What about people on the street? What about people who knock on my door and ask for money?II
A. Most Beggars are Swindlers
The Halachah is that we do not give money to beggars until we clarify that they are truly poor. This is a "Takanat Chazal" (Ruling of our Sages) since most beggars are swindlers. This ruling is found in the Gemara in Baba Batra (9a) and the Shulchan Aruch (Yoreh De'ah 251:10) and it applies to this day. Ninety percent of people who ask for money today are swindlers. If someone asks for money we do not give it until he provides verification from a reliable Rabbi. If someone asks for food, however, we give him immediately. What if he is being deceptive? It is a potentially life-threatening situation and we therefore provide food without delay. Today, most beggars in Israel do not ask for food because there are many soup kitchens, and if you offer them food, they say that they prefer money...
In sum: We only give tzedakah to people who we can verify are poor or to trustworthy organizations. Give to one, two, three trustworthy organizations. It is not possible to provide for every poor person in any event. Most beggars are not evil people, they are mentally and emotionally unstable. We do not judge them, but we only give tzedakah to actual poor people.
Perhaps I am misapplying this rule, but it seems to me that when giving to an organization one must also verify that the organization is performing charitable work and that it needs more money to perform its good work. If not, perhaps there is no mitzvah in giving to them.
Yet, how many charitable organizations open their books to the public so we can verify whether they truly need money and whether the money we give to them is used for charity? And if not to the public, which I understand is not necessarily a good deal, then have an independent auditor certify their financial statements. I don't doubt that yeshivos are significantly underfunded and need to raise money from the public. But how can I give any money to them when I am unable to verify that the money given to them is used appropriately? Religious organizations in the US are exempt from filing certain forms so we are unable to verify this on our own. So what are we supposed to do?
I supposed I will ask a posek when and (hopefully not but) if I am asked to be honored by a charitable organization, whether I am allowed to do so if their financials are not audited. Perhaps, despite all the wonderful people there and due simply to inadequate management rather than ill will, they are not using their funds properly and do not qualify as a charity. Otherwise, how am I allowed to give them money or encourage others to do so? Aren't we concerned that the large sums of money we are allocating to charity are not being used to fulfill the mitzvah, as per Jeremiah's curse?
Finally, why isn't everyone in our community demanding this? Maybe if tuition vouchers or some other similar program is approved, the government will require audited financials from any school that receives such money. That, I think, might be an extremely positive unintended outcome. But until then, why are we ignoring this simple concept. Regardless of whether halakhah requires it, it's just common sense which perhaps, as the saying goes, isn't so common.
UPDATE: A commenter directed us to this excellent resource: Just-Tzedakah.org.