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Beware the Bad Charity

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Not all charities are good.

With over 1.5 million nonprofits nationwide, keeping a careful watch on each one is nearly impossible. As two recent major scandals remind us, some charities are allowed to reap the benefits of non-profit status while failing to put their charitable work above their own self-interests.

One frightening example of this abuse came to light this May when 4 cancer charities, including the Children’s Cancer Fund of America, were exposed for spending a mere 3% of their nearly $200 million donation dollars on the patients they set out to benefit. Most of the money was spent on personal expenses for the employees of the charity: from couples cruises to college tuition.

“Some charities use donations to send children with cancer to Disney World,” said Mark Hammond, secretary of state for South Carolina. “In this case, the Children’s Cancer Fund of America used donations to send themselves to Disney World.”

ABUSE VS MISUSE

The Cancer charity scandal is a chilling example of how goodwill can be abused, but often the problem has nothing to do with malicious intent or theft; some charities just aren’t very good at getting things done. If the cost of running the company and paying the employees is similar to the amount of donations they receive, they simply don’t have any funds left to make the world better. Perhaps they spend as much money trying to fundraise as they earn in fundraising. After all, fundraising is a skill that some have and others lack. Just ask the presidential nominees.

The Red Cross, one of the biggest charities in the world, recently came under fire for failing to turn dollars into impact. Critics claim that despite raising nearly 500 million dollars for earthquake victims in Haiti they had little to no long lasting impact on the area, building only 6 permanent homes.

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Part of the problem of running a charity so large is that it becomes difficult to effectively oversee all of the organization’s operations. That appears to be exactly what happened in Haiti. The Red Cross distributed a lot of the money amongst other organizations in Haiti which then proved incompetent. Red Cross officials cited “constant upheaval” of staff as one reason why relief efforts were so far below what was promised. Ultimately in this case the main issue for the Red Cross is transparency; after all of the delegation and distribution of projects they lost any ability to account for the changes they promised.

Maybe the Red Cross is undeserving of the criticism they are receiving. Maybe their flaw is not in failing to have an impact but in in failing to be able to provide evidence of that impact. No matter where the chips fall, it is disheartening to see such poor housekeeping by such a massive and well-respected organization. So what’s a person who wants to give back to do?

KEEP DONATING YOUR MONEY TO CHARITY.

I repeat, keep donating your money to charity. There are few actions more worthwhile and fulfilling than contributing to a cause that is greater than yourself. That’s why our team at Tab for a Cause works every day to make charitable donation as integral to everyday life as surfing the web. But don’t donate blindly. Don’t think that brand names or noble causes mean a charity is good at keeping their promises.

Thankfully, there are tools to help. Sites like Charity Navigator use tax forms and expense reports to evaluate the efficacy of charities. They will catch organizations that are ineffective in creating impact, as long as they are accurate in their reporting. They might, however, miss things like the cancer charities scandal. In that case the reported efficacy was high, though false. Sites like GiveWell that really do an in depth survey of a charity are much more likely to catch that kind of underlying corruption. For more information about these tools, check out this post on how to pick the right charity.

For some, the tax form strategy of Charity Navigator is too far removed from impact and the tiny subset of recommended charities from GiveWell is too exclusive. If so, doing some research on your own might be necessary. Here are a few suggestions from our team about how you can donate with confidence:

  • Demand clear, measured goals from the charities you pick. Question lofty goals that don’t come with a clear sense of the steps needed to get there.
  • Look back for old projects and see if the goals and steps they suggested were met and documented.
  • Consider supporting charities that work locally. Hopefully the impact they are having will be evident to you.
  • Volunteer: there is no better way to get a sense for how efficient a charity is than working alongside them.

In the end, the best way to give is by finding the things that matter most to you. If you do, you’ll find yourself getting involved and keeping up to date with the work they are doing. That investment is not only crucial to moving charities forward but is also the most powerful way to gain confidence that you are supporting an outstanding organization. We know because we live it every day as we direct the donations of tens of thousands of tabbers. We chose our charities based on ratings and numbers, but as we continue to support them and their projects we gain confidence in their work and vision.

DONATING IS A BET. 

You are betting that the charity you choose will do a better job of using that money to make the world a better place than you yourself would do. And as with any bet you should feel confident in your choice, nervous about the risk, and proud when the bet pays off.

Written by Joey DeBruin, Marketing Manager, @Joey_Gladly