Corrupt Charities

CORRECTION APPENDED. See below.

In 2006, do-gooding is very much en vogue. We live in an era of self-congratulation, and a happy byproduct of this time is that taking part in organized acts of kindness is a must for every up-and-comer.
Yes, lending a hand is hip, but the world of charitable giving is very much in trouble.

For all their publicity stunts and feel-good lines, many of today’s powerhouse nonprofits are extremely inefficient. They commit the majority of their resources to pulling in potential donors through razzle-dazzle, so that there is little left in the way of resources for their actual causes. Inevitably, every organization has overhead costs, but a staggering number of charities today are falling out of control in this respect.

At one time, the American Cancer Society spent only 26 percent of its national multibillion-dollar budget on actual medical research, allotting the other three-fourths to “operating expenses.” In 2005, the Phoenix New Times reported that the Arizona branch of the organization spent a gasp-inducing 95 percent on overhead costs, leaving cancer victims “only the crumbs.” At the Arizona branch, the nonprofit spends 22 times as much on paying employees, maintaining the offices, and keeping the coffee machine running than on the cancer victims they are supposedly aiming to save.

A peer organization of the American Cancer Society, the Susan G. Komen Breast Cancer Foundation, is practically efficient by comparison. Still, the foundation, which organizes the annual Breast Cancer 3-Day walking events nationally, can only manage to put forward 13 cents to its cause for every dollar it raises. Those 3-Day t-shirts must be high quality cotton. [See correction below.]

Of course, inefficiency is hardly limited to cancer-fighting organizations. The Greenpeace Fund—widely known for its environmental and conservation goals—is among the least efficient of environmental charities. It commits upwards of 82 percent of its fundraising to overhead costs. Costly tree-hugging. [See correction below.]

Several groups assess and rate nonprofits’ efficiency, equipping donors with the tools to pick their charities. Charity Navigator, one such group, ranks charities based on a five-star rating scale of efficiency and publishes data on the breakdown of nonprofits’ organizational spending. Charity Navigator bestows only one star upon the American Cancer Society, while the marginally more efficient Susan G. Komen Breast Cancer Foundation wins three stars. The popular March of Dimes Birth Defects Foundation wins a two-star efficiency rating for spending 82 cents of every dollar it raises on overhead costs. [See correction below.]

The flaw of contemporary philanthropy, however, is bigger than just the existence of corrupt and inefficient nonprofit organizations. The underlying problem is the people that make these bloated charities possible—it is the proponents of these charities, after all, who are letting the organizations get away with sleaze. Americans, for all their supposed generosity, are not discerning enough when it comes to giving. They pour money into organizations like the American Cancer Society and the March of Dimes, because these organizations appeal to people’s publicity sensitivities. Too many worthy and efficient nonprofits are pushed aside by massive money-eating charities because donors prefer to go to galas than to actually do good.

Traditionally, the reasons to contribute to the health of society were fairly banal: general compassion for others; feeling good about yourself as you lie in bed at night pondering your life; political gains; the occasional tax deduction.

But now, the charity culture has taken on new form. In the new fundraising world, the strategy is making amusements. Charitable organizations attract philanthropists through “fun” incentives. Nonprofits organize events throughout the year that are booked as good times: the American Cancer Society puts on the Relay for Life event, and the March of Dimes Foundation organizes its famed annual walk to save premature babies— with its measly 18 cents per dollar raised.

Few people ask whether their money is being used wisely, but these events are wildly successful: Americans from a wide variety of demographics and socioeconomic networks turn up in droves. People are attracted to organizations like the American Cancer Society because they are glamorous and glitzy. The nonprofits pull in donors with promises of celebrity appearances and festive awareness-raising parties.

Although this trend of glamorous charity seems fantastic for the world of nonprofits, or at least innocuous, it is actually calamitous, because insincere philanthropy enables quasi-fraudulent inefficient charities.

Proponents of the charitable giving culture must seek reform within the shoddy nonprofits ruling the charity roosts. When giving money, donors should make use of resources like Charity Navigator to discern between which nonprofits use funding efficiently and which don’t. Only when this happens will the nearly-fraudulent charities of America feel the pressure to clean up their acts.

And until this sort of reform occurs, donors to some charities might as well run their dollar bills through paper shredders.

Lucy M. Caldwell ’09, a Crimson editor, lives in Wigglesworth Hall.


Correction:

The May 15, 2006 op-ed, “Corrupt Charities,” incorrectly stated the percentage of donations to several charities that goes towards the people and programs that the charities exist to serve. According to Charity Navigator, a non-profit organization that reviews charitable groups, the Susan G. Komen Breast Cancer Foundation spends 76.2 percent of money on its causes, not 13 percent. The Greenpeace Fund spends 78.8 percent on its causes, not 18 percent. The March of Dimes Birth Defects Foundation spends
75.1 percent, not 18 percent. Charity Navigator does, however, rate the efficiency of Greenpeace and March of Dimes as deserving only two stars, which signifies that it “needs improvement.” The Komen Foundation received a three-star “good” rating.

These significant mistakes occurred because the writer did not correctly read the information on the organizations listed on Charity Navigator’s website. Though Crimson policy is that all pieces must be fact-checked by an editor, the editor of this piece also misread the numbers.

The Crimson will investigate how the writer, the editor of the piece, and two proofers missed the factual inaccuracies, and will move to ensure that existing fact-checking policies are strictly followed so that similar errors will not happen in the future.