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Charities to avoid

Never give money to any organization unless you’ve investigated it first. The Tampa Bay Times did a lot of investigating for you, and compiled a list of the 50 worst — it seems a shame that we don’t have a law that sets a threshhold for the ratio of money spent on salaries to money disbursed for the actual cause — below this number, you’re a legitimate charity, above that number, you’re a grifting operation preying on the generosity of the public.

They probably can’t do that, though, because then every priest would get labeled as a con man.

The worst are the cancer charities, and the article singles out the Reynolds family and their nepotistic mill for turning dying people into salaries. Cancer is so easy for these crooks: everyone hates it, there’s no plus side to the disease, and there’s a wealth of tragic heart-string-tugging tales to be mined from it. And you can’t tell from the names what they’re doing! “Breast Cancer Society,” for instance…how can you refuse to support that? “Children’s Cancer Fund of America” — OMG, children with cancer? Here’s $50. And then the members of the family doing the bilking make 6 figure salaries for shipping boxes of surplus junk to cancer patients.

It reinforces my opinion that most people are good, but that there are always parasites who know what buttons to push to exploit them.

Comments

  1. says

    Sorry PZ have to disagree here, as a rule this system of judging non profits is harming how they can help instead of doing anything good. Check out this great TED talks on just this issue, found this really enlightening. Interesting how he adds this attitude about “overhead” in non profits comes from the puritans.. Something we need to kill with fire, this attitude, not the puritans ;)

  2. The very model of a modern armchair general says

    I can see his point, but I’m not convinced. It sounds like he’s saying we should be more grateful for whatever scraps we’re thrown.

  3. says

    I guess I don’t understand the math they are using…

    <15 Project Cure (Bradenton, FL) $51.5 million $20.4 million 0.0%

    Does this mean they are just banking the $31.1m for future use?

  4. Alverant says

    I noticed some of the charities on the list have names similar to or uses key words of other charities so that people would get confused or think they are part of the same organization (ie “Make a Wish Foundation”).

  5. Rey Fox says

    but that there are always parasites who know what buttons to push to exploit them.

    And what’s more, many if not most of those parasites still think they’re doing good.

  6. Louis says

    Well, just to go for two opposing viewpoints in two comments, I’ll cautiously support the general thrust of the OP.

    Two of my best friends work in the charity sector as financial controller/CEO (I think, one of them just got promoted, I’ll have to check). They are adamant that certain charities should not be supported precisely because of the ratio of actual giving to in house salaries etc. This is their area of expertise, and I am inclined to defer to them. Whenever I consider a new charity to give to I always run it by them. They in turn get the charity’s public financial records and explain the dodgy bits to this dull old scientist! Never steered me wrong yet. It’s just one way I try to make sure that my charity pounds do the most work.

    [/anecdote]

    Louis

  7. CaitieCat says

    I was also struck by the composition of the list – largely kids, cancer, cops/veterans/firefighters. Only near the very end do a couple of other diseases show up. It really is a case of people preying on the things we care about the most (or at least some identifiably large subset of us do).

    Some days I think humanity is a nasty infection Earth has, that it probably tries to hide from other planets at parties. “Humans? No, I don’t have humans, how could you say such a thing, I’m a perfectly respectable planet.”

    “What’s that? Oh. Um. It was a bad pimple. Totally not a nuclear blast.”

  8. timmyson says

    @1 thorjonsson

    I can’t rewatch the video right now. What would be a better metric? We don’t even have a better metric than total revenue or profit for judging for-profit companies.

    If someone says “I want my money to do good in the world” the best (though flawed) metric we have is some variation on money-spent-helping and ratio of overhead to money-spent-helping.

  9. says

    If someone is employed by the charity and their job is to go down to the hospital and comfort or entertain sick children, does that salary count as overhead or direct cash aid?

  10. Pen says

    This is one of the reasons I’m so devastated that our social security system is being dismantled and the British government seem to be actively seeking to replace it with a set of non accountable charities. Charities should be for emergencies and extras not for predictable and important things like cancer research or care.

  11. says

    I think for those of you who would argue against the video, check it out first. Ultimately its talking about a number of factors, #1 attracting talented people from for profit, #2 spending money to grow the charity and increase the size of the pie, meaning if you spend 50% on marketing/fundraising and make 100 million, this is substantially better than spending 10% on marketing/fundraising and making 20 million.

    Ultimately we punish charities by this rigid standard which comes from religious puritan ideology, which is something we need to break, this belief that we can’t spend money to make money for charities and ultimately grow the non profit sector from 2% where it has been stagnant for 40 years to 3 or 4% which would mean a dramatic increase in help for poor, hungry, etc.. The big social issues need innovation and smart people but the for profit takes most of these people because who would take a job making $80,000 a year when you can make $400,000 and still donate tons of money to charity and be called a philanthropist.

    This is the summary of the video by the way, I really do hope you all check it out as we skeptics should not just accept this old dated view of thinking about charity at face value and subject the charities to this standard which stagnates and ultimately harms the people who need this help the most.

  12. CaitieCat says

    Okay – but how is throwing profit, and oftentimes egregious levels of profit – into the “caring for the needy” mix helping, exactly? Money that could have gone to charities that will use it for the needy is going into the pockets of people like the Reynolds’ clan instead. This isn’t even a morally neutral thing: “Well, they’re ripping off their donors, but it’s not hurting anyone”. No, this is money which is now not going to the needy at all.

    There is a clear net negative from allowing this kind of operation to continue.

    Are there times when a charity’s startup costs might cause their numbers to be out of whack? Maybe. But the worst of the offenders on that list has been around for 29 years. How long does this startup phase have to take before we say, “Yeah, these guys are grifters”?

  13. says

    It should be based on all the factors Catie, and like you say real offenders are easier to identify from real charities that we can differentiate quite easily.

    Ultimately if they are spending 100 million to donate 10 million there is something wrong, for a well established charity, but then again 10 million is nothing to sneeze at either.

    I only caution that a generic standard of judging all charities on the same standard will harm those who seek to do good because we are perpetuating a myth about how charities should operate and be open to letting them operate which will ultimately bring in more money and do more by not limiting them to such moral objections based on puritan ideals.

  14. CaitieCat says

    Okay, but with respect, you’re the only one seeing a trend toward generalization. I see a specific list of 50 especially egregious cases, where the ratios would struggle to reach 10%, and few of them are new. Even the OP is not titled “Never give to charity they’re all ripoffs”; it’s “Charities to avoid”, and lists 50 particularly bad ones.

    I guess it seems like you’re defending what isn’t being attacked. I’ve seen dozens of posts on FtB which have solicited for what are, I’m sure, mostly good organizations. No one’s saying don’t give to them. Even with CFI, people are saying “Well, if you don’t give to them, maybe give to this group or that group, that are doing good works.”

  15. says

    Respectfully :) PZ states right off the bat:

    ” it seems a shame that we don’t have a law that sets a threshhold for the ratio of money spent on salaries to money disbursed for the actual cause”

    I have no problem calling out charities worthy of scorn, they do exist. However this pervasive belief that charities should be handcuffed even more than they already are because of this outdated belief about charity and frugality, is not the way to go.

  16. CaitieCat says

    Apologies, you’re right, I missed that.

    But the mere saying “we should set a law” doesn’t say that the law will be “10% for salaries or you’re busted.” Just that we should look into some sort of line whereby we could say, “Well, that does seem pretty egregious, let’s investigate whether there’s something going wrong here.” Maybe that line can be the 35% mentioned a few times above. Maybe more for the first three years of operation or something.

    But if we’re going to dismantle the safety net, we need to make sure that the places our now-charity (formerly-taxes) go are actually going to accomplish the purpose we want them to, rather than just enrich a few grifters and their various hangers-on.

  17. evilDoug says

    meaning if you spend 50% on marketing/fundraising and make 100 million, this is substantially better than spending 10% on marketing/fundraising and making 20 million.

    This is a legitimate view if and ONLY if the total amount of money donated to charities is increased by the fundraising efforts. I believe this is very unlikely to be the case. The total pie is finite. Most people I know have a budget for charity.
    Say a person has $100 to donate, and they split it between 2 charities they have donated directly to (i.e. not through 3rd party) for years. Along comes a smooth talking marketing racketeer who convinces the person to donate $50 to a new charity. Racketeer takes $40 of the $50. Rest of person’s money split between original two. That is $60 going to charity and $40 going to profiteer, whereas previously $100 went to charity.

  18. says

    I disagree, there is the fact that 2% of GDP goes to charity and has been this way for 4 decades, where are the economy during that time has grown substantially. It takes money to get people to pay attention to charity, you need to visible, you need to spend money to get donations. It is much easier for large charities that are well established, which is why some on this list certainly have to answer for why so much is overhead in those cases.

    All people have a budget for charity, and in many instances if your talking about cancer there is a multitude to choose from and you of course can go solely on the basis of overhead. But you should not make this a hardened rule which is what I am trying to point out. If we are to grow charitable donations and increase what they can contribute we have to stop focusing on one measuring stick and look at the whole picture.

    Right which is in rare cases, and should not poison how we view and treat all charities.

  19. Owen says

    I’m all for the concept of “doing well by doing good”, and I understand that the non-profit sector is not as well compensated as the private sector, by an order of magnitude or so (or is it two now?). On the other hand, the social contract between people and charities is different from that between people and regular businesses.
    When I go to buy a fridge or a cable TV package I understand that my money goes to a corporation and that is the end of the matter – while I may have my own opinion about the relative amounts of revenue that go to employee salaries vs executive bonuses vs R&D vs shareholder dividends etc., that’s not really the point. the desired outcome is that I have a new fridge.
    When I donate to charity, the desired outcome is that I want my money to go to the cause supported by the charity, not the charity itself. The purpose of the charity is to identify who will benefit best from my money and then get out of the damn way. Now, if the charity decides that the best way to do that is to pay its chief executive enough to live the same lifestyle as potentially wealthy donors so he can credibly squeeze them for more donations then ok, but I see that as perpetuating a system which I consider broken.
    Just as a company’s profit margin is an indicator of its qualilty as a business, so is a non-profits “donation margin”, and I will persist in using that as a benchmark. Perhaps not the only consideration, but it’s going to be a major factor nonetheless.

  20. CaitieCat says

    Alright, fair question, then, thorjonsson – what metric would you recommend we use alongside some standard of what’s an egregious amount of overhead for an established charity?

    Say we say that, in an established charity (after a few years, or whatever standard we find), no more than 60% should go to in-house stuff, that at least 40% goes to the ostensibly-helped. Or 20% or something, whatever.

    What else should we put alongside that would help a charity explain away the excessive overhead (and to be clear, I’m talking about established ones, I’ll stipulate to your argument than startup can affect things)? What other metrics can we use?

    And remember, the goal is not to use a great deal of public money doing it, or we might have just as well kept the safety net intact; and we certainly won’t get a huge big-money deal for enforcement of it, so it’s got to be something basically enforceable with the mechanisms already in existence, for the most part.

  21. says

    Well the goal in the video is to go from 2% to 3% which is very attainable and would make significant improvements in a lot of people’s lives.

    As for what specific measures outside of “overhead” I think that is for those most familiar with charities and should be decided by those in that segment to come up with guidelines.

    Your example sounds reasonable, I don’t know how we do a one size fits all, I do not think that is the ideal way to go and these tiny minority of charities should not make us forget that most are doing things much differently, because they know that this measuring stick is used to judge them, most do their up most to spend as little as they can on salary, promotion, fundraising and give as much to their target group.

    Yeah and startup charities need to be measured differently than established by how we measure their success and failure.

    I think the problem is people are not seeing how little is being given in comparison what could be done if we let non profits go wild, but most of them are very hesitant to be seen as spending too much on salaries and other overhead, there by stagnating non profits and killing any chance of seeing that 3% number or who knows, even go higher.

  22. CaitieCat says

    Fair enough; my own personal experience as volunteer and/or board member (I’m trying to remember, but both are in the double-digits over 30-odd years) is that the constraints on them have tended to be public apathy, represented in both money and volunteer deficits, rather than public antagonism or distrust. Granted these are clearly linked, but in what direction causality flows (if it does) I’m not sure.

    I think it also depends on where we’re talking about. I’m assuming the US, with its wild-and-woolly approach to for-profit enterprise, because here in America-Lite, we tend to be willing to let the government handle such things with some reasonability. Our founding docs say “Peace, Order, and Good Government”, which you’ll agree, I think, reflects a somewhat different approach to that of our neighbours to the south.

  23. CaitieCat says

    And equally, I can be Cait or caitie or pretty much anything along those lines without particular offence. Thanks for the interesting discussion. :)

  24. Ben P says

    If someone is employed by the charity and their job is to go down to the hospital and comfort or entertain sick children, does that salary count as overhead or direct cash aid?

    That’s probably charitable work.

    These figures generally come from tax reports. Even though 501(c)(3)’s are exempt, they have to file informational returns. In those informational reports they have to identify the income and expenditures of the group and what percentage of the revenue was devoted to the charitable activities vs administration.

    Many states also have consumer protection statutes requiring charities and entities soliciting money to make similar public disclosures.

  25. Artor says

    They probably can’t do that, though, because then every priest would get labeled as a con man.

    Well yes, but how is that a bad thing?

  26. silomowbray, sans frottage pour la douche says

    I don’t know if this is similar in the U.S., but up here in Canadia (where the Canadians are) if you write “For X” on the cheque where x=what you want the money spent on, the charity must respect that wish.

  27. CaitieCat says

    Is it, silomowbray? It’d never come up in any of the charities I’ve been on the board of, so I had no way one way or the other, and simple Googles weren’t finding any good answers. Do you have a citation, perhaps?

    (I am, if it’s unclear, also in the unGrateful White North. :) )

  28. CaitieCat says

    I had no way one way

    Er, rather, I had no way of knowing one way… et c..

    More evidence of my Canadianitude, dopeyfingers.

  29. says

    Of course, it is really too bad that churches and other religious organizations aren’t required to file the same informational paperwork as a 501(c)3. Imagine the interesting things one would learn.

  30. Trebuchet says

    I don’t know if this is similar in the U.S., but up here in Canadia (where the Canadians are) if you write “For X” on the cheque where x=what you want the money spent on, the charity must respect that wish.

    I’m not sure how it works in Canada, but down here that typically means they make an accounting adjustment but it does NOT change the amount that’s used on “X”. It’s pretty much a scam, and why I stopped giving to my company’s charitable fund some years ago.

    I suspect most of those on the “Top 50″ list have called me on the phone at one time or another. NEVER donate to a charity that calls you on the phone, particularly if they claim to represent police or firefighters.

    @#3:

    I guess I don’t understand the math they are using…

    15 Project Cure (Bradenton, FL) $51.5 million $20.4 million 0.0%

    Does this mean they are just banking the $31.1m for future use?

    No. More likely it’s going in the pocket of the CEO and his family. The second number is the amount spent directly on solicitation, not total overhead. It’s the amount they’re paying the telemarketers.

  31. Trebuchet says

    I haven’t read the full series of Tampa Bay Times articles yet, but intend to do so a bit later. The TBT is also the owner of the excellent Politifact site.

  32. Johnny Vector says

    I can’t watch the video at work, but since it’s a TED talk I assume the speaker provides no evidence that paying non-profit employees more would increase the total amount given. And this:

    there is the fact that 2% of GDP goes to charity and has been this way for 4 decades, where are the economy during that time has grown substantially

    makes little or no sense. Yeah, the economy has grown, and so has the amount of charity, apparently in exact proportion to the growth of the economy. Apparently whatever non-profits have been doing hasn’t had any effect on giving rates. That’s evidence that giving rates are inelastic in the face of anything that has been tried so far.

    If you’re going to convince me that paying the staff of non-profits more will actually increase the amount going to charity, you need to show me some kind of study that indicates why you think that will happen. And you need numbers that work. You talk about increasing giving by 50%, and ask how wonderful that would be. Well, it depends on how much more overhead there is. The cutoff for inclusion in the CFC is 25%, and a lot of the big charities hover around that line. So if you have to triple that overhead to get a 50% increase in giving, then the total outlays to those supposedly being helped hasn’t changed at all. All you’ve done then is transferred money from the general public to the people running the charities.

    So don’t show me a TED talk, show me a white paper laying out the numbers.

  33. kestra says

    As a nonprofit worker myself, I have some thoughts to contribute.

    Those charities highlighted in the Tampa Bay Times’ articles are, unquestionably, scams. They willfully and knowingly chose names that conflate with more efficient and better known groups, they hire telemarketers who keep the lion’s share of the money earned in their names, and the compensation for their top staff is excessive.

    But they still qualify as legitimate 501(c)3 tax-exempt public welfare organizations. And all of their activities can be easily spun: “Those calls don’t just raise money they raise ‘awareness’!” (A great many sins can be hidden with some tasteful draping of “raising awareness!”. See Komen, Susan J for the Cure) “Top staff commands top salaries, how else can we attract the best people?” “We actually spend more on direct services but it can’t be accounted as a program expense because of Arcane Accounting Rules J6 & Ax5″, & etc. And all those points are valid and simultaneously true.

    You see, if you judge a charity based *solely* on its “efficiency”, you are missing a huge part of the picture. Only the huge, “brand-name” charities like Red Cross can command such a high return on their solicitations that they have excellent “costs of fundraising”. (Or else charities with one or two independently wealthy patrons who are willing to cover a large portion of the costs. And what happens to those charities when that patron dies or the trust fund runs out?) Not to mention that “cost of fundraising” is a percentage of total expenditures that can be calculated in about a dozen different ways. Salaries are just one sore point: e.g. how much of a worker’s salary can be attributed to mission or “program”, and how much is administrative and how much fundraising, if that worker does public relations, which often ends up being all three?

    Charity Navigator is a great example of a big “watchdog” (and a charity itself, btw) which looks only at the financial picture. They take publicly filed IRS-990s and run the numbers, and if the group achieves what they deem to be an acceptable rate of fundraising, you get some stars! If not, NO stars for you! They actually recently changed their calculating formula and that lead to a number of previously rated charities to lose all their stars. Which seems more than a bit capricious and subjective…

    Another approach is a joint venture between Guidestar, the big online database for public charities & their tax documents, and the BBB, which is “Charting Impact”. This requires charities to answer questions about their past achievements, their current work, and their future plans, to be presented along with available financial data. Incidentally, Guidestar used to calculate a program/admin/fundraising pie-chart, but have abandoned that approach in favor of evaluating a charities actual programs and work.

    Also, there is GreatNonprofits, which is like Yelp for charities, and can be gamed both positively and negatively, just like Yelp.

    I recommend looking at what programs a charity provides. If you like those programs, their scope and their goals, then support that charity. No charity can achieve perfect efficiency of $1 given is $1 spent on cause. If that’s the kind of charity you want, just give out $1 bills to people you want to help. Otherwise you will have to come to terms with a certain amount of shrinkage, graft, waste, and failed attempts that come with any human endeavor.

  34. kestra says

    PS: Johnny Vector, the CFC hasn’t required 25% cost of fundraising for several years now.

  35. says

    @Trebuchet

    No. More likely it’s going in the pocket of the CEO and his family. The second number is the amount spent directly on solicitation, not total overhead. It’s the amount they’re paying the telemarketers.

    OMFSM! I need to get into the charity business!

    @#29
    I raised money to do some charity work a while back and we were coached to tell people NOT to write “for TheDawgLives” on the check… I forget their reasoning, something about needing to take an overhead % out. That was based in Florida.

  36. says

    The sad thing is, our psychology tends to require that our buttons be pushed, to get money out of people to start with. Basically… the rule is – personal, close by, and identifiable will “double” what ever money a person tosses into the pot. This being precisely why all those charities, like “Save the Children”, give you “photos of the child you are helping!”, and all that stuff. Too far away, someone we flat out don’t know, so its impersonal, or vast numbers, and we automatically tend to go into a, “How can my small bit of cash possibly help to solve this, after all, I don’t know why its happening to them, maybe it was there fault somehow, and, besides, its doesn’t personally effect me at all.”, mode. It doesn’t, according to experiments on the subject, seem to matter if you are someone that gives to charity already, or tries to avoid this sort of thinking, it still seems to, on some level, drive how much, if anything, will we do to help.

    This is also the theory behind the insane crap I put up with at my job, where the stores “compete” over how much they take in, and spend all day making noise, distracting their employees from their jobs to do it, and annoying customers, with a lot of fake happy shouting, all so that more of the customers feel “compelled” to donate.

    So, knowing this, if you want to scam a lot of people out of money, via the pretense of helping “cancer survivors” (noting that everyone gets to be a survivor, even if old age had a higher chance of killing them first, or all they had removed was a small spot on their skin), you start out by pushing **all** of the same buttons that charities need to, in general, to get the best result. And, because of that, its becomes pretty hard to tell, purely from the perspective of tactics used, just what they are actually doing with the money *after* its been collected. Its also why charity, instead of something derived from a tax system, will never work as well. Without someone pushing, or making it personal, or giving names to specific victims, *most* people will never give anything close to enough to matter to everyone that needs it. The rest.. will see the obvious pandering to their emotions, and just say, “Kiss off!”, whether their “concerns” are valid or they are actually just heartless scum.

  37. kestra says

    PPS: If you “designate” a donation in the US, for example, giving a big gift to a university to be used improving the library, then yes, the charity is bound to spend that money improving the library, even if it was recently renovated and even if their biggest lecture hall is in desperate need of a new HVAC system.

    A classic example of this are the huge floral arrangements in the lobby of the NYC Metropolitan Museum of Art. Those flowers are endowed. They are funded with a gift from last century from some Big Name New Yorker or another, and cannot be economized on, even if the Met is experiencing record drops in contributions and has to lay off staff, as happened several years ago during the Recent Economic Unpleasantness.

    For obvious reasons, charities HATE designated gifts, much preferring “general operating support.” And for equally obvious reasons, grants and foundations that used to blithely give “general operating support”-type grants in past decades have switched to a “Program funding only, please” model of grant making in recent years.

  38. evilDoug says

    Is it, silomowbray?

    Donations to United Way in Canada work that way – you can earmark your donation for a particular grantee agency.

    If you really trust a specific charitable organization to which you donate, I would discourage earmarking money for specific things. Many people don’t want their money to go to what the perceive as “administration.” This was typical for a not-for-profit I used to be involved with. The result was that people who should have been doing programs and program development spent more time than the should with things like doing photocopying and envelope stuffing. Overall output of the agency might have been better served by hiring another clerical support person.
    I will also point out that in that agency, a large part of revenue went to staff salaries, and it was (and is) entirely legitimate. The work of the staff was the “product”, for the most part. (Consider, for example, an organization that teaches English to new immigrants by going into communities and partner businesses, etc. NO money goes the the beneficiaries – all of goes into office expenses, travel expenses and salaries.)

    The local zoo, which is a not-for-profit, gets large donations to pour concrete to make new buildings, but can’t seem to find money to make decent signs to even so much as properly identify the animals on exhibit (part of the problem is the CEO, and I mean you Clement Lanthier, is an idiot more suited to run an amusement park than a zoo.)

    My general advise to anyone being solicited by phone to make a donation: Don’t do it. Identify the kinds of things you want to support, find out who is doing those things and how well they are doing them, and send your donations directly to them. Cut out the middlemen entirely.

    And if you volunteer – ask about the “it’s a dirty job but somebody has to do it” jobs. Put a bit of time into those jobs.

  39. evilDoug says

    I see others already covered most of what I had to say. Refresh is my friend – or would be if I allowed it.

  40. Johnny Vector says

    (Consider, for example, an organization that teaches English to new immigrants by going into communities and partner businesses, etc. NO money goes the the beneficiaries – all of goes into office expenses, travel expenses and salaries.)

    Or Natural Resources Defense Council. They are a bunch of lawyers and lobbyists; basically all their money is used by their employees. Their output is in consent decrees and legislation passed, not in dollars. So do they have 100% overhead? Or is it 0% overhead? The official number they give the Combined Federal Campaign is 13%, but I have no idea what that includes. Fundraising, maybe? I suppose somewhere on the CFC sites that is explained, but the CFC web presence is a maze of twisty pages, all different.

    kestra, thanks for the update; now that you mention it I do see a lot of charities in the CFC with higher overhead than 25%. Course that further validates my point that if you increase overhead by 3x to get a 1.5x increase in giving, you haven’t helped anyone but the charity employees.

  41. silomowbray, sans frottage pour la douche says

    @30, CaitieCat:

    It’s what I’ve been made to understand. I’m on the board of a local charity, and we most definitely have to abide by the wishes of the donors. I did some googling and couldn’t find any direct citations, though. I suspect it’s buried somewhere in the voluminous tomes of rules kept by the CRA. I’ll keep poking around though, because now that you’ve raised the question I’d like to read the actual rule.

    CanadaHelps.Org does discuss it briefly, although it seems like that some charities are cleverly sidestepping the rule by not allowing for designation of gifts by simply not providing choices as to where the money is to go in the online donation form.

  42. CaitieCat says

    yeah – thanks for bringing it up, actually, because I’m going to poke a friend of mine who’s the treasurer for a charity here that just did a big rebuilding project (theatre burnt down), if anyone’s got experience of what the laws are among people I know, she’s the one.

    And definitely thanks to those who’ve raised really good points about the ways charities work, there’s been a lot of really useful information there, thank you.

  43. leftwingfox says

    Some general thoughts on the video…

    I agree with the advertising and risk assessments, and the general utility of higher overheads. I’m much less convinced by the points on executive compensation and access to capital markets.

    Part of it is because executive compensation is so out of hand right now. I think we’d be FAR better off as a society by increasing the tax rates on the top earners and reducing the personal incentives for that “$50 million CEO”, than to try and match it in government and the non-profit sector.

    I think an argument can be made for performance-based compensation across the organization though: earmarking certain percentage for bonuses. That could retain overhead percentages while providing appropriate incentive for increased revenues.

    Access to capital markets is a much riskier issue. Publicly traded companies have to deal with fiduciary responsibility to those investors, leading to potential conflicts between investor profits and charitable giving. If this weren’t the case, then for-profit corporations could be much more charitable, funnelling profits and company resources into direct action charities.

    I can certainly see a case made for an increased percentage of the top-tier charities income going to growth and outreach. That said, The charities mentioned in this article are spending somewhere between 88%-100% of their income between solicitors and administrative expenses, while the Red Cross spends close to 88% of it’s donations on actual programs. I think there might be a case for increasing the wiggle-room for advertising and fundraising above that 12%, but there is going to be a point of diminishing returns on advertising and fundraising investment.

  44. unclefrogy says

    here is my question about charities and non profits not to judge them completely the same but to some degree similar.
    If the point of either non profits and charities is to do what they do to render the service to society then they would have expenses over head. Do they really need luxury offices or would moderate efficient functional one serve as well. Do they really need to make the compensation par with what is occurring in the private for profit sector do they really need to be making the top level employes wealthy to attract the best and the brightest? Seems that of late the best and the brightest have succeed in knocking the economies of the world all most flat. My trust of people and what they say is not that strong generally it is even worse when it comes to money.
    I work for a none profit and I have questions.
    uncle frogy

  45. says

    The old method of comparing admin costs to program costs doesn’t work well for several reasons; 1.) ‘Creative accounting,’ in which a lot of otherwise legit charities fudge the books to achieve the ‘magic’ split, and 2.) It is completely useless for small charities who may be doing tremendous good, but require a larger percentage of their tiny budgets to pay for employees. As Dan Pallotta points out above (TED link), we would have no polio vaccine if Jonas Salk was held to a 10-20% overhead limit.

    The real way to investigate a charity is to look at their actual impact on whatever cause they support. What are they actually accomplishing? Are they always moving forward in achieve the goal?

    Another clue? ‘Awareness’ is not a program. It’s an important tactic for raising resources for what is really needed (e.g. research, education, capital). If an organization’s primary mission is ‘raising awareness’ and they consider that an end in itself (think Komen), that should be a red flag. Doesn’t matter if everyone in the world is aware of your mission if that awareness doesn’t translate into some tangible good. In the case of Komen, they have done a bang up job of raising awareness about breast cancer (and enriching their executives with lucrative corporate partnerships), but contributing a mere 14-20% of their annual budget to actual research means that you are still just as likely to die from aggressive breast cancer today as you were when they began, despite the billions they have raised.That is not success

  46. says

    The worst are the cancer charities

    See, it appalls me that such a thing even exists. If the U.S. had a halfway decent healthcare system, people who had cancer would be getting treatment already, and there’d be bigass grants from NIH and the like for cancer research. Frankly, in a country with a functional social infrastructure at least half of the charities in the country would just cease to exist (which can’t happen too soon, in my book; I have a fundamental objection to anything of significance relying on charity to be accomplished, because that means it often won’t be.)
    thorjonssen

    Ultimately its talking about a number of factors, #1 attracting talented people from for profit, #2 spending money to grow the charity and increase the size of the pie

    The italicized portion is MBA-speak bullshit; talented people are no less likely to be motivated by non-financial rewards than anyone else; frankly I don’t see any benefit to having more of the kind of people who do well in the for-profit sector working for nonprofits, given how they run the things they’re currently in charge of. The bolded part is a big [citation needed]; getting more money to go to a given charity is not the same thing as getting more money to go to charities in general, and the latter is a much more difficult task.

    grow the non profit sector from 2% where it has been stagnant for 40 years to 3 or 4% which would mean a dramatic increase in help for poor, hungry, etc.
    Or, you know, we could have a social safety net that doesn’t rely on charity to help the poor and hungry. Outlandish concept, I know, but it might be worth a bit of thought.
    Owen

    I’m all for the concept of “doing well by doing good”, and I understand that the non-profit sector is not as well compensated as the private sector, by an order of magnitude or so (or is it two now?).

    This is less an argument that the heads of nonprofits should get more than it is an argument that the heads of for profit outfits should get a lot less, a proposal for which there are a lot of other excellent arguments. On the subject of doing well by doing good, I heartily recommend you look at Social businesses such as the Grameen Bank.

    Just as a company’s profit margin is an indicator of its quality as a business

    Not even remotely true. See above.

    Caitie

    Fair enough; my own personal experience as volunteer and/or board member (I’m trying to remember, but both are in the double-digits over 30-odd years) is that the constraints on them have tended to be public apathy, represented in both money and volunteer deficits, rather than public antagonism or distrust

    This is basically true; the factors that go into charitable donations are basically A)knowledge (knowing that assistance is needed), b)Proximity (How far away the need is), emotional connection (how c)much affinity an individual has for the cause/people needing help), d)capacity (how much time/money/whatever they feel they have to give), and e)bystander effect (that’s not the right name for it but I can’t cudgel the right one out of my head right now; basically, it’s degree of belief that someone else will take care of it).
    At present in the U.S., the rich tend to fail on a, b, and c, as they generally don’t live near people who need help, don’t know how bad off a lot of people actually are, and don’t feel any emotional connection to them anyway. (also d:“Are there no prisons? Are there no workhouses?”)
    Poor people usually run aground on d, having no money to spare, nor energy after the work needed to even stay in the same place.

    Johnny Vector

    Or Natural Resources Defense Council. They are a bunch of lawyers and lobbyists; basically all their money is used by their employees. Their output is in consent decrees and legislation passed, not in dollars. So do they have 100% overhead? Or is it 0% overhead?

    It may be important at this time to distinguish ‘charity’ from ‘Not for profit operation’; the former is a subclass of the latter, but many nonprofits are not charitable groups in any meaningful sense (see, for example, many opera or ballet companies, orchestras, museums, advocacy organizations, etc.) The NRDC falls into the latter category but not the former, and is judged by different standards.

  47. kestra says

    I disagree. An orchestra, museum, or university might not operate on a program level the same way as a cancer-research org or a veterans group, but they all have to register as 501(c)3s and they all have to abide by the same rules, and they all *should* copy/crib/steal from each other on fundraising strategies. I think it is a fundamental weakness, from a fundraising perspective, of a lot of those “we’re not charities!” charities that they aren’t willing to embrace their field and hold themselves as somehow “above” straight-up, “we’re a-helping people!” charities that actively solicit for funds.

    You seem to be drawing a distinction between 501(c)4s, public advocacy organizations that *can* lobby for political causes, and 501(c)3s, which cannot.

  48. says

    That is one relevant distinction, yes (incidentally, based on their mission statement, it really looks like the NRDC ought to be a 501(c)4s, not 501c(3)s), but not the one I was aiming at. I’m not saying that those other groups are ‘above’ charities, I’m saying that a) their work doesn’t actually directly help anyone, so unlike charities you can’t measure their effectiveness by how many people they’ve tangibly helped, and b) as I noted above, I favor the abolishment of virtually all charities, or rather their replacement by a functional social infrastructure, while the more general category of nonprofits often do things that are worthwhile but are not essential to the basic functioning of society (no one will die or be sentenced to destitution if there are fewer opera companies, for instance, although a number of people will have to settle for careers less fulfilling than opera would have been), and/or should specifically not be done or funded by government. For instance, political advocacy groups; I would actually have no problem with government money going to most of the groups on the list, and explicitly favor it for things like museums and research institutes, but I can’t see government funding of political advocacy groups going anywhere good, even though I agree that the existence of such things is an essential and inevitable part of a democratic society.

  49. says

    I actually worked at one of those boiler room “charity” call centers a loooooong time ago. We were given a script to start the call, but after the preamble, we were on our own. They pressured us to get the money and didn’t care what we said. I walked out after half a day when I realized what the deal was.

    Now here is where it got really screwy. I knew it was a scam. I had names and locations. So I called the local police to report it. Guess what the response was? They were aware of it. They didn’t like it (especially since it was one that used sympathy for cops to milk the money) but it “wasn’t their jurisdiction.” It was, apparently, supposed to be handled by some other state department. For years, in fact. They took my name and contact info, said they would pass it over to that dept but I never heard back. That was about 20 years ago. Don’t know if they ever got busted or not.

    Moral of my story? Never give money over the phone!
    Also, I think better oversight and regulation of charities are needed.

  50. robster says

    Had to laugh at this thought: “because then every priest would get labeled as a con man”. That’s been accepted by many for a long time. Every time a priest opens his mouth (they’re mostly he’s) he’s lying, telling untruths, touting silly nonsense as a truth. All they sell is a fraud. There’s no greater fraud than what religion “teaches” its deluded followers. It’s all a complete con.

  51. says

    Hmm. Coming back from work, and I am not sure this was exactly addressed, but.. what ever metric used, the idea that “direct aid” is a good one makes me kind of hmm.. What does that mean exactly? That they actually spend money on a specific person? What if they only give it to research, is that still direct? Or, this one stands out:

    Operation Lookout National Center for Missing Youth $19.6 million $16.1 million 0.0%

    Ok.. So.. Who exactly is the “direct aid” go to? Police, to aid them in finding kids? Foster parents, to help those who don’t have anyone to go back to? The parents, to do what exactly? Are they expected to throw it up in the air and then follow the money to where the missing kid is?

    I mean, it seems to me that this is likely to be close to absolutely 100% administration, since the purpose, one would presume from the name, is to work on a) finding missing kids, b) doing so in ways that the regular authorities maybe don’t have the resources to do so with, or, in the worst cases, even c) actually convincing police, in some cases, that there is a reason to look in the first place (as sometimes happens in the sex slave trade, with teens, and some police departments, which jump to the conclusion “runaway”, and then don’t bother to look that hard for any other reasons they might have vanished, once they determine that its not kidnapping).

    So, yeah, as some people above said, purely “payout” is a really crappy metric to use, but it goes beyond that, in the case of the list, because.. how would you even come up with a number, at all, for some of them, given what they are likely actually doing, such as funding research, or hunting for missing kids, neither of which *have* any sort of “single end person that gets some of the money”.

  52. Jerry says

    Whenever I get a charity solicitation by telephone, I always listen for a key phrase, such as “calling on behalf of…”. To me, that signals a telemarketer, which means a cut goes to them. The more pressure tactics they use, the more likely their commission is a larger chunk of my ‘donation’, and the less likely I am to give them any money. I may be wrong, but it’s my rule of thumb.