I used to work for a company that had a non-profit arm. At the time, the company was doing well and it pledged that 100% of donations would go directly to the programs it provided, with the company covering all other expenses. I even elected to donate a portion of my paycheck. But a couple of years later, I found out that it was all a lie. The company president was using the foundation’s funds to fund his sales trips to Europe. Among other things, that ended up contributing to my decision to quit.
Since then I’ve been extremely wary of donating money to charitable organizations. It didn’t help when I found out that Greg Mortenson’s Central Asia Institute, which I was enamored by when I read his book Three Cups of Tea, was a sham.
Recently I’ve heard a lot of noise over the debate of whether or not it’s OK to give to panhandlers. A lot of people talk about how you should donate money to charity instead of giving to panhandlers. But I’ve learned that just because they’re recognized by the government as a charity, doesn’t mean they’re not abusing your trust and using your donations to enrich themselves instead of their programs.
I like to use Charity Navigator to scope out different charities to see if they’re worth my donation. Sadly enough, a lot of them aren’t. Here are just a few I’ve come across.
Kid Wish Network. These guys are so bad that instead of rating the organization, Charity Navigator just issued an advisory for donors to avoid it altogether. Mimicking the Make a Wish Foundation to provide dying kids with a precious moment to forget what they’re going through, Kid Wish Network has raised over $110 million since 1997. But less than $3 million of that has actually gone to granting wishes. I don’t know about you, but if I were to ever meet one of the guys running the show, I’d pop him in the mouth.
Cancer Fund of America. Unlike most cancer-related organizations, this one has nothing to do with actual research or paying for treatment. Rather, the charity collects goods like movies or toiletry items, and takes donations to buy goods and donates them to families who have gone broke from paying for treatment. The problem? These guys are making a killing doing it. Less than $0.01 per $1.00 donated actually goes to buying goods for financially crippled families, all under the umbrella of a 501(c)(3) organization. Which is worse? The organization screwing people over or the donors who are enabling them by not doing their due diligence?
Celebrity charities. After what was called “4+ successful years,” the Kanye West Foundation closed its doors in 2011. Apparently it had something to do with the fact that in its 2010 tax filings, it spent $572,383, with exactly $0 spent to help people. Kanye’s wifey must’ve taken a page from his book since she keeps $0.90 of every $1.00 she grosses from her eBay “charity” auctions. Apparently that’s all eBay requires to call it a charity auction, and math is hard. Here’s a bunch of other celebrity charities that should make you want to bust some skulls. That being said, not all celebs are horrible people. There are some that do in fact use their fame for good (top rated ones at the top).
Well-known organizations that don’t impress
St. Jude Children’s Research Hospital. You’ve probably seen their commercials teeming with celebrities. If it’s something your favorite celebs can get behind, you can too, right? But only roughly $0.70 of every $1.00 you donate actually goes to the cause. $0.10 of your donation goes to pay administrative expenses, including the nearly $1 million salary for charity’s CEO. Considering the American Red Cross brings in over three times as much revenue and pays their CEO half that much, that should bother you. I know a bunch of celebs are on board with St. Jude, but unlike them, you can’t afford to support a multimillionaire charity CEO.
March of Dimes. This charity was founded by FDR back in the ’30s, but it’s not doing so hot anymore. In fact, some neat little graphs on its page show that while revenues went down the previous three years, expenses have gone up. Only $0.66 of a $1.00 donated goes to the actual cause, while the rest goes to administrative expenses (including a $500k salary for the CEO) and fundraising. Again, the American Red Cross generates almost 17 times more revenue, but their CEOs are paid about the same amount.
USA for UNHCR (United Nations High Commissioner for Refugees). Angelina Jolie has been a big supporter for this one, donating over $5 million since 2000. But I wonder how she feels about the fact that only $1.98 million of that has gone to helping refugees. USA for UNHCR spends a whopping $0.47 on every $1.00 donated on fundraising efforts. Only $0.39 actually goes to the cause. Bureaucracy at its best!
What you should do
First of all, recognize that some charities are just as good at marketing as the best for-profit companies out there. Overhead and fundraising are necessary to keep things going, so you’re going to have a hard time finding a charity that actually uses 100% of your donation for its programs. But there are enough out there that make it worth the search.
For example, Step Up For Students, a non-profit in Florida that is focused on providing low-income families with better education opportunities, uses almost $0.99 of every $1.00 donated to actually help those families. One of my favorites, the Utah Food Bank, uses about $0.97 of every $1.00 donated to help alleviate hunger. Use Charity Navigator to search for your favorites to see how they stack up. Also check out their tips for donors to maximize your donation.
Giving to charity isn’t the right answer on its own. Have you had a bad experience with a charity?