The Tampa Bay Times and the Center for Investigative Reporting recently published a list of “America’s 50 Worst Charities.” Collectively these 50 organizations raised $1.3 billion during the last decade but they handed more than $1 billion of that to paid for-profit fundraising corporations. That means on average, that less than 25 cents out of every dollar donated actually was used by these charities to fulfill their mission.
Quite frankly, that’s shameful. There is general agreement among charity watchdogs that at the very most, fundraising expenses should never exceed 35 percent. In practice, it’s far lower than that for most reputable organizations. With these 50 worst charities, however, 77 percent of the money raised is being sent to private for-profit fundraising firms. Add to that the organization’s administrative salaries and in some cases, almost nothing is left to help those in need.
While I’m not familiar with all of these organizations, I wouldn’t be surprised if more than a few of them exist solely to generate money for the administrators and fundraisers themselves. The money generated to serve the community is almost incidental to their primary motive of making money under the guise of charity. That got me wondering. How do these organizations do it? How do they convince Americans to give their hard-earned money away when so little of it is actually being used for a charitable purpose?
The problem is two-fold. First, there are too many for-profit fundraising corporations that don’t hesitate to con you out of your hard-earned dollar so long as they get paid. Second, criminals don’t hesitate to play on your compassion in an effort to steal your money. Here are some tips to ensure that your charitable gifts actually are being used in a charitable way.
Just hang up the phone
It’s not unheard of for some paid telemarketing firms to take 90 percent of your gift as its fee. Sadly, some of the worst examples around the country are firefighter associations and police benevolent groups who regularly hire telemarketers to raise money for them. When you complain that too much money is being diverted to the for-profit telemarketing firm, a common response is “95 percent of the profits go to the charity.” That sounds great until you consider what they actually said. 95 percent of the profits, go to the charity. In other words, on a gift of $10, the telemarketing firm takes its commission of $9 first, then $1 is profit. Of that profit, at least 95 percent – or just 95 cents – actually goes to the charity.
It’s bad enough we have to deal with for-profit telemarketers who obfuscate the truth. Telephone appeals are also one of the most common ways for con artists to steal your charitable dollars. They’ll lie to you and make claims about their work, but nothing is in writing and all you have to go on is a voice on the other end of the phone.
Of course, receiving a call from a paid telemarketing firm is very different than hearing from a local volunteer who telephones you about a Door County charity. Our local volunteers are your friend and neighbors who aren’t getting paid, so you can be sure that 100 percent of your total gift goes to the charity. But when you get a call from a telemarketing firm, even if it claims to represent a charity you know, the best thing to do is just hang up the phone.
A rose by another name might actually be a pig
Within minutes of the Boston Marathon bombing, a fake Twitter feed was set up to collect donations to a charity that didn’t even exist. The Domains, a trade website that covers internet domain trends, reported that within a few days of the explosions, 125 website domain names were registered. Many of those names sounded eerily similar to reputable charities.
A common tactic is to create a website with a name that makes you think you’re giving to a well-known charity when in reality it’s an organization that pays most of its money to for-profit fundraising firms, or at worst is not a charity at all. Whether it’s a fake charity committing outright fraud or an immoral organization that pays 90 percent of its donations to fundraising firms, the key to protecting yourself is to do your homework. Make sure you’re giving to a reputable and well-known national organization or to a local charity in our community that is governed by volunteers from Door County. In either case, you want to be sure that your money isn’t just paying fundraisers, it’s actually doing some good in the world.
When it comes to collection boxes, keep it local
One of the most abhorrent examples of fraud in the nonprofit world occurred after the terrible tragedy at the twin towers on Sept. 11, 2001. In communities far removed from New York City, collections boxes appeared next to cash registers in local stores asking Americans to donate to the orphans of 9/11. There is a legitimate and reputable charity that exists to assist those children orphaned on that fateful day, but it had nothing to do with the collection boxes put out in its name – and none of the money ever reached the charity.
When it comes to collection boxes, be it a person sitting at a table in front of a grocery store or a box on the counter of your favorite restaurant, don’t give unless it’s for an organization in Door County. Far too often that box claiming to collect money for an out-of-town charity isn’t affiliated with the charity at all. It was put out by a criminal collecting your cash and keeping it for themselves.
Our local charities have staff and volunteers who live in and work in our community, so it’s hard for a criminal to collect money on a local organization’s behalf without being discovered. But it’s easy to claim to represent a church from Milwaukee or a children’s charity in Madison because nobody from those organizations is in Door County to see the fraud. So when it comes to collection boxes, keep your giving local. And if you still want to make a gift to that children’s charity in Madison, mail them a check directly.
You can find the complete list of the “America’s Worst Charities” at tampabay.com/americas-worst-charities.
This column by Bret Bicoy was originally published in the Peninsula Pulse on June 19, 2013.