Not All Charities Are Created Equal

I support charities. Quite a few of them actually. Maybe it isn’t the best use of the money I donate, as dozens receive small amounts, rather than one or two receiving a sizable donation.

I know that with few exceptions, it seems like my donations are mostly wasted, and it has me questioning my support. In the past, I have taken note of charities and their cost of overhead. However, I haven’t kept up with it and I desperately need to. Before I donate another cent, It is imperative that I research each and every charity that I have donated to, and may donate to again.

If you aren’t sure why I have such a concern, let’s examine two charities that are similar, if not equal, in the eyes of most people. Let’s look at the SPCA International and the Humane Society International. To many, these are both charitable organizations that exist to help animals and prevent cruelty to them. On the surface, this is true.

If you dig deeper, you quickly learn that one of them is not like the other, and is not worthy of your donation. Using CharityNavigator, look at the results:

CharityNavigator – SPCA International
CharityNavigator – Humane Society International

Even a cursory glance shows there are serious issues with the SPCA. It displays a Donor Advisory, outlining past problems and items of interest that should influence your donation choice, as outlined by a CNN article. On the other hand, the Humane Society immediately gives you the current rating, along with important financial information such as the charity spending 79.5% of their money on program expenses (i.e. helping as advertised), 5% on administrative overhead, and 15.3% on fundraising.

Compare that with other well-known charities:

Charity Program
Michael J. Fox Foundation / Parkinson’s Research 91% 2.4% 6.5%
People for the Ethical Treatment of Animals 84.7% 1.3% 13.9%
American Cancer Society 71.2% 6.8% 21.8%
George Bush Presidential Library Foundation 45% 40.9% 14%
National Vietnam Veterans Foundation 9.7% 2.4% 87.8%

You can quickly see that some charities are not as efficient as others, spending as much as 87.8% on fundraising. Even though they may keep administrative overhead as low as 2.4%, that is a lot of money spent raising more money, that will only be spent to raise more. This ultimately leads to a cycle where huge amounts of money are wasted, rather than spending it on the stated purpose (program expense). In other cases, you have a charity that is only 14% fundraising, but 40.9% goes to administrative overhead, almost as much as the program expenses. This is often a sign that the charity executives are getting paid obscene amounts of money.

When picking a charity, you want to avoid any of them have either a high admin overhead, or a high fundraising cost. These charities are simply not efficient. Using these numbers, you can determine the “fundraising efficiency”, what describes as “The amount spent to raise $1 in charitable contributions, and calculates for you. To calculate a charity’s fundraising efficiency, we divide its fundraising expenses by the total contributions it receives.

Looking at the national charities I have donated to in the last 12 months, it becomes educational:

Charity Program
American Red Cross 92.2% 4.0% 3.7%
ACLU 86.0% 5.4% 8.4%
Juvenile Diabetes Research Foundation 81.5% 7.0% 11.4%
Dumb Friend’s League 77.8% 8.0% 14.0%
Humane Society of US 77.0% 3.7% 19.1%
World Wildlife Fund 73.0% 6.2% 20.6%
Planned Parenthood 72.8% 8.8% 18.3%
USO 72.2% 10.1% 17.5%
St Jude Children’s Research Hospital 70.3% 9.2% 20.3%
March of Dimes 65.9% 10.9% 23.1%
ASPCA 58.4% 5.2% 36.2%
Wounded Warrior Project 55.0% 8.0% 36.8%
National Law Enforcement Officers Memorial Fund 47.5% 5.5% 46.8%
Paralyzed Veterans of America 33.1% 6.8% 59.9%
National Veterans Services Fund, Inc. 21.1% 3.6% 75.2%
Natnl Cancer Research Center [1] 0.5% 1.6% 97.8%

[1] This is part of the Walker Cancer Research Institute, and has been blogged about before regarding it being a scam. This is why I should have done my due diligence.

There are a few others I have donated to as well. One is a 501(c)(3) but isn’t required to file the paperwork for Charity Navigator to perform an analysis. Several others are legitimate charities, just much smaller so they fly well under the radar of such a site. For example, Lita’s Squirrel Rescue, Ellicott Wildlife Rehab Center, and Cavy Care are such charities.

Based on the chart above, I know that I have donated to one sketchy charity, and not picked so wisely for others. I am not sure what a good ratio is to maintain, but the top percentile is a good guideline. Moving forward, I will only donate to charities that have a good return on investment.

In case you are wondering what prompted this article, it was the relentless snail mail sent by most of these charities. For a few, donating $25 one year led to what seems like solicitations that cost them $50 included pens, calendars, notepads, lapel pins, stickers, address labels, envelopes, cards, stamps, calculators, and more crap. Every time I received one, I wondered why they didn’t use my money to help their cause. Why do they mail me every 10 days asking for more money? This led me to wonder about their fundraising efforts, and as we see above, some charities specialize in it instead of actually helping people.

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