It is that time of year… time to review my charitable giving and send end of the year donations.
I wonder how many bad charities I have funded in my lifetime. One charity, in particular, comes to mind. When I lived in New Jersey, I was solicited monthly by local police and firefighter benevolent organizations. The solicitors sounded like police officers or firefighters. Their messages included vague threats and heart wrenching stories. If I donated, I would receive a sticker in the mail that I could display on my car window, my home, or a storefront.
The vague threat went something like this. Police look for this sticker when they encounter you and if they don’t see it, they know that you don’t support them. The “carrot” was a story about how they assisted a wounded officer’s family. Most of the time, I hung up (that was before caller ID), but one day, I was in a good mood and I donated $100. Thus began the opening of the solicitation spigot, and from then on, I was called at least monthly.
I recently learned from an HBO documentary, Telemarketers, that these calls were actually made by telemarketers who sounded like police officers. The local Fraternal Order of Police (FOP) organizations had contracted with these telemarketing companies. The contracts allowed the telemarketers to retain 90%-95% of the donations and lie that the money went to the families of injured police officers. (Which meant, of course, that the local FOP only got $5 of the $100 that I donated.) New Jersey local FOPs were not the only ones. Local FOP organizations from many states had similar contracts. Some contracts allowed telemarketers to claim that 100% of the funds went to support victims. Sadly, very little of the money ever went to victims. The FOPs spent that 5 to 10% of my donation on their leadership’s vacations, travel, conventions, and personal items. Even worse was that these donations came from retirees, homemakers, disabled people, and people who were just scraping by. Typical donations were between $5-$50. After a telemarketing company was shut down, another took its place and these FOPs operated virtually unscathed.
Does this still happen today? I don’t know. One of the Connecticut FOPs that was featured on the HBO documentary, Telemarketers, claims that they now get 50% of the amount collected (which is still a very high fundraising percentage).
I did some research to find out how much of the money that I donated actually went to a worthy cause. I’ll tell you how that search came out later.
Americans give more to charities than any other country and there are a lot of shady people who have created nonprofits to take advantage of our generosity.
Many deceptive charities use a name that is similar to a reputable charitable organization. For example, the Children’s Wish Foundation International sounds like the Make a Wish Foundation. The latter is a highly regarded charity (4 out of 4 stars) that provides special experiences to children suffering from serious illnesses. The Children’s Wish Foundation International, on the other hand, is a 1 star charity, where more than ½ of donations goes into the pockets of the founders.
It is easy to fall for this “name game.” For example, the Disabled Veterans National Foundation spends 95% on administration and fundraising and only 5% gets to victims, while the National Military Family Association spends 18% on fundraising and administration and uses the remaining 82% for its programs. But which name sounds more legitimate to you?
Here is another example. How many times have we seen the ads and heard the catchy jingle for Kars4Kids? Did you know that the money is used almost exclusively for Orthodox Jewish children’s education? Their advertisements gloss over how the money will benefit all children (it won’t).
Earning legendary status in the dodgy donations game was the Cancer Fund of America, which used less than 1% of funds to support cancer victims.
If we want to choose our charities wisely, there are a number of charity watchdog organizations. All of these rely on our donations to continue.
- Charity Watch has been operating since 1992. It reviews data from IRS filings and evaluates the charity’s financials. It uses a letter-grade rating system. To get the top rating (A) a charity must spend at least 75 percent or more on its programs.
- Charity Navigator uses a 4-star rating system based on its review of the IRS tax filings and annual reports. It evaluates how funds are spent and the accuracy of the charity’s website and reporting.
- GuideStar is another charity watchdog site. Instead of a rating system it provides comprehensive data about a charity for potential donors to analyze. Many commercial businesses and foundations rely on this site.
- GreatNonprofits provides reviews by people who have experience with the charity. The website’s goal is to highlight the work of the best charities and, unlike the other watchdogs, includes the smaller organizations. A nonprofit establishes a free profile page on their site and notifies its constituents, clients, donors, and volunteers to post comments about the charity.
- Better Business Bureau (BBB) is always a trustworthy source of information. It offers a Give Wisely website, that summarizes IRS filing information and adds any BBB complaints about the charity.
Back to my story about my donation to the New Jersey FOP. I searched for the New Jersey FOP on these watchdog websites, but none had much information. Charity Navigator gave the national FOP organization a top rating. Sadly even though I contributed money to an organization that probably took 95% of my donation, these watch organizations could not tell me that.
There is a good reason. There are over 1.5 million nonprofit organizations in the United States, too many for cash starved nonprofits to evaluate.
I decided to do my own research for one of my favorite charities, called The Bail Project. This charity pays the bail for those jailed for minor offenses who cannot afford bail. Without money for bail, these people remain in jail for months, causing them to lose their jobs and, due to the backlog of cases, usually plead guilty just to get out of jail. On the other hand, people who can afford to put up bail are able to continue working, and 80% of these cases end up being dismissed. It is a win-win charity, allowing these individuals to be a part of productive society and, at the same time, it saves us millions of tax dollars on incarcerations. As part of its work, The Bail Project charity follows up with people who are out on bail to ensure that they have legal representation and show up for their court dates. Follow up has been so successful that 93% of the bail money is returned and used again. The charity also advocates in legislatures to eliminate cash bail. Due to their hard work and that of others, there are now three states that have abolished cash bail.
So I did my research on this nonprofit. It was not in any of the charity watchdog websites, but it has a very informative website with annual reports and detailed financials. I found that 55% of my donation is used for bail. Another 36% is used for salaries and client expenses. The rest is travel, rent, etc. They report no fundraising expenses. They have 115 employees who are mostly client support representatives who assist the clients, ensure that clients have legal advocacy, and manage the bail process. One quarter of the employees are prior beneficiaries of The Bail Project. My conclusion is that this is a good nonprofit and I will continue supporting it.
So, what should you do to ensure that your funds are being used properly? First check the Charity watchdog (and consider donating to them) websites. Second, review the nonprofit’s website. Nonprofits are required to disclose their activities as well as the amount spent on fundraising and administration. If it is a local charity and you have a question, contact them directly.
Upon reflection, I am sure that the $100 that I donated was not the only money that I have wasted on a nefarious charity. But it is my goal that it will be my last.
Angela Rieck, a Caroline County native, received her PhD in Mathematical Psychology from the University of Maryland and worked as a scientist at Bell Labs, and other high-tech companies in New Jersey before retiring as a corporate executive. Angela and her dogs divide their time between St Michaels and Key West Florida. Her daughter lives and works in New York City.