Are charity's actually giving all their money to a good use?

Question

I heard that the big charities are absolutely loaded and only half a penny out of every pound is being used. And when you think about all the money they spend on advertising, and how much the managers and that are being paid, is any money actually being used for what it's meant to?

Answer 1

No. Had a friend who worked at the Salvation Army!

As soon as good, expensive goods like a TV or something vintage or of any value would come in for the poor or unfortunate, all the Workers, Big Boss on top and staff would check out the goods and take them home, while the homeless got the left overs, rejects or poorly used items no one else wanted on staff.

Can you imagine $$$$, of course the executives help themselves a 98%.
Don't let anyone fool you.

Answer 2

In most cases charities use about 1/3 - 1/2 of all donations that they get are used for the public. The rest is needed to run the organization.

In essence a charity is a business that is not out to make a profit. Because of this there is the myth that they don't pay for anything and have no expenses. Buildings have to be rented and maintained, electricity paid for, vehicles gassed up and insured. They carry huge amounts of liability insurance (they get sued too.) Employees have to be paid with benefits.

As such a charity has all the costs of being a business without the income of a business. They count on your contributions to operate. Some are better than others at controlling costs than others but it is not a scam to make money. A real charity does provide needed services that the rest of us cannot. As for the advertising, it is often done at reduced rates or for free.

Answer 3

There are a lot of websites out there to help you determine how much a charity spends towards their work and how much money goes towards administrative expenses. I have listed one below. Charities such as the Red Cross spend a lot more on administration and advertising than say your local soup kitchen. It is however a much smaller portion of their budget. The Red Cross spent almost 300,000,000.00 dollars last year on admin. and fund-raising, but it is only 8.9 % of their budget.

On the other hand, your local soup kitchen probably can't stay open without someone to keep on top of supplies and organize volunteers since not many people can afford to give up that much time without any pay, even if they wanted to. So if the soup kitchen spends half of the donations on administration, it may be necessary just to function.

If you do choose to give money, I would advise you to put it into some charity you really believe in. Even if it is less efficient, it may be more meaningful, for the group and for you.

Answer 4

I work in the Not-for-Profit sector, and while I'm by no means a definitive source, I can offer some perspective.

There are some organizations that are dubbed "Grant Eaters." These groups eat up a lot of public donations and private grants and their administrative and operating costs do eat into overhead to the tune of 50% or more, and those groups are pathetic. They are usually quite disorganized, or else they are only interested in the theoretical work involved in Charity rather than actual, tangible results. That is to say, they spend ridiculous amounts of money on studies, research and unnecessarily high operating costs, and end up doing as little as providing woefully inadequate care or resources on the ground.

A good charity or organization will try to keep their administrative and operating costs as low as possible without disrupting the service to donors or donees/clients. A good charitable organization will also readily provide a clear breakdown of costs per dollar to the public in order to assure donors of accountability. They also provide their operating budget numbers, broken down into departmental costs.

Though it depends on the particular needs and goals of an organization, a good benchmark is a ratio of 80:20. 80% of the income goes to the actual programs or resource provision, 20% to operating or administrative costs. If op/admin costs are less, that's even better.

Answer 5

Good question.

I think there is a question mark over the charity industry.

Undoubtedly some are very well organized, completely legitimate and not only raise a lot of money, but more importantly spend it in ways that are actually beneficial to the people the charities are supposed to be serving.

I don't think that could be said for a lot of charitys, and I think a lot of charitys are simply quasi-criminal organizations designed to fleece the public.

Answer 6

A LOT of those charities that are on TV pay people on their Board and so only a SMALL fraction of the money goes to the actual needy. Besides that, what little gets sent to some of those countries, gets taken by their corrupt governments for their own military and never really gets to the little starving children that are there. It's really sad because those little starving kids do exist but if for every dollar that the charity gets, only 6 cents goes to give the children food and medicine, it is a lost cause.

Give only to well researched charities.

Answer 7

You can go to your public library and read the financial statements of any reputable charity. I assure you will find their statements shocking. A friend of mine was interested in funding a child in a third world country and investigated some of the most respected charity that advertised on television. Most of them, although they advertised that you could fund a child for something like $25.00 dollars a month, take the money and put it in a general fund. Out of that fund, so much goes for administration, advertising, stationary, etc., and finally the kids gets some. Many CEO's of the larger charities make in excess of $200,000 a year. If you are going to donate to charity, investigate the charity before you give them a dime. Any charity that will not give you access to their financial statement is not on the up and up. I've given up on charities. If I have extra money.I usually buy something for someone in need. I just saw the website that the woman above me listed. Forget the library. That is one fantastic site.

Answer 8

Depends on the charity. Most reputable charities spend about 70-90% on the program/purpose; the rest is spent on administrative and fundraising costs. If the organization is at all reputable, they will disclose this information in their fundraising materials and on their website and give a precise percentage.

There are groups that analyse the effectiveness of charities and rate them. Charity Navigator lists thousands of charities headquartered in the United States. I just checked there today; the good news is, in their analysis, you can give with confidence to most charities.

I've worked at a number of non-profits over the years, and I assure you, most of the money goes to what it's meant to; no one gets rich working there.

Answer 9

Be realistic - Each and every charity does have some overhead...banking fees to cash your donation cheque or paper, printer and envelope to mail your receipt. Maybe even staff to carry out the services?

An excellent rule of thumb is to check into a charity's annual report. Ensure that at the VERY LEAST 30% of each dollar raised goes to it's purposes. A well run charity should run closer to 20%.

Also, ensure that their "purposes" are what you think. IF it's Cancer Research, then is is research performed in one area of the body, genetic, overseas, in one clinic?

Answer 10

There are ways to research what percentage of a charity's budget goes to the actual cause. The term used is "Service Dollars" as opposed to administration, overhead, etc. You should look for one that at least 80 percent of your money will go to service dollars...

I forget the names of the websites that give you this info... I think the National Organization of Philanthropy, and another called something like Guidestar... anyhow, the information is out there you just have to research it.