Monday, May 2, 2011

Magic Words

No, I'm not talking 'please' or 'thank you.'

I don't even mean 'I'm sorry' or "I love you.'

The magic words my husband recently discovered are, "Can you tell me how much of my donation is used for administrative costs, and how much reaches the intended recipients?"

You've all been there:  the phone rings at dinnertime, and on the other end is someone who mispronounces your name, asks how your evening is going, and then proceeds to ask for money for the March of Dimes, the statewide Sheriff's Association, the Make-A-Wish Foundation, the Disabled Veterans, the American Cancer Society, etc.

They go into their spiel, and you squirm on your end while they systematically shoot down every one of your questions and objections.  This weekend, however, my husband asked the magic question to two separate tele-fundraisers, and each time he got an identical response - they gave him the 800-number for the charity itself, and told him he could get the information from them.  Nothing else.  No more badgering or wheedling or cajoling.  They didn't even ask if they could send out a pledge card for us to consider.  Just an 800-number and a hasty hang-up.

Try it next time.  "Can you tell me how much of my donation is used for administrative costs, and how much reaches the intended recipients?"

Please don't misunderstand me - many of these are doing vitally important, life-saving work.  Your favorite charity is also a deeply personal issue - I remember tearfully volunteering and donating to the American Heart Association right after a family member had quadruple-bypass surgery. 

Putting emotion aside, however, I urge everyone to choose a charity that gives the most bang-for-your-buck, getting the most aid to its intended recipients while keeping administrative costs to a minimum, including a relatively low salary for its CEO.

Two websites I have recently discovered are Charity Navigator Rating and the Better Business Bureau's Charity Reviews.

There I learned the shocking truth that since Congress passed the Do-Not-Call legislation, most telemarketing firms lost their for-profit clients, so they had to turn to nonprofit organizations for business.  Many of those fundraising phone calls are made by a paid third-party agency who keeps anywhere from 25 to 95 cents of every dollar they collect.  (reference here, see #2)

I'll use the American Cancer Society as a random example, only because they were the last charity to call me, and they did use a paid caller.  This means that by pledging 20 dollars to the American Cancer Society over the phone, you run the risk that up to 18 of those dollars will be kept by the telemarketing firm who called you.  Make sure you ask every charity phone solicitor if they are volunteering for the agency itself, or if they are paid callers.  Ask them how much money will actually end up with the charity.  By law, they have to tell you.

At those aforementioned websites, you can find out that the American Cancer Society has a 1 out of 4 star rating for efficency, and that only 72% of your donation is actually for their program costs, and their CEO's salary is over a million dollars a year.  That means that of those 2 dollars that might actually make it to the American Cancer Society, a whopping $1.44 will actually be used for the American Cancer Society's research and programs.  Makes you feel really good about your donation, doesn't it?

Let's look at another charity.   Food for the Poor  rates 4 out of 4 stars, and uses 97% of their donations to bring relief to the poorest of the poor, especially in Haiti.  Their CEO earns around $425,000 a year. 

The Disabled Veterans Associations of Parma, Oh, uses an appalling 4.6% of the funds raised to actually help disabled vets; 94.6% goes to fundraising costs.  The last reported salary for their CEO was $89,746.  They have a rating of zero stars.

In contrast, the Disabled American Veterans Charitable Services Trust has a four-star, 92.3% efficiency rating, and their chairman gets $3,980 a year in compensation.  Wow.  What a difference.

And the Disabled American Veterans?  This is what the Charity Navigator has to say:  "We don't evaluate Disabled American Veterans.  Why not? We evaluate charitable organizations as defined by section 501(c)(3) of the Internal Revenue Code. DAV is a 501(c)(4) organization, and as such, its activities are not limited exclusively to charitable pursuits.

The Woman2Woman Breast Cancer Foundation, who recently solicited us for a donation, doesn't have a rating because it hasn't disclosed any information to the Better Business Bureau, despite repeated attempts by the BBB to compile the information.  What does THAT say to you?

I also just learned that the American Heart Association rates 2 stars, pays its Executive Director 450K a year and only uses 74.3% of donations for its stated purposes.  Oh, and its former Exec Director pulled in 1.1 million annually.  Sweet.

I guess the bottom line is that charitable giving can be a veritable minefield to navigate.  Be informed.  Please know where your money is going before you send that check or give out your credit card number.  Even better, refuse to donate over the phone (see #5), look up the charity for yourself, and donate to them directly to ensure that they receive every penny.

Please read Top 10 Best Practices of Savvy Donors before you make another donation, and read What To Do When A Charity Calls before the phone rings again.

And remember, charity is another word for love.

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