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Don't Just "Think" Before You Donate... Research

This anonymous chart has been making the rounds again. It's important to research any organization before you contribute (Charity Navigator is a great place to start). Believe it or not, internet memes aren't the most reliable source for this. This chart is flat-out factually incorrect on nearly every entry. (Its bias in favor of military organizations and against poverty- and disaster-relief groups is also notable, but that's for another discussion.)

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Before we unpack the problems, let's take this opportunity to clarify some common misconceptions about non-profits:

• The difference between a for-profit and a non-profit is what happens to any income that exceeds operating costs. In a for-profit, it can either be reinvested in the company or returned to investors in the form of dividends. In a non-profit, it must be reinvested in the company. That's it-- the only real difference.

• It's in a non-profit's best interests to keep operating costs low in order to convince donors that their money is being well spent, but this does not mean that a CEO can't be paid what they're worth. It's important to consider wages and expenses in the context of overall budget and operations, not as stand-alone numbers. Their 990 filings will provide this and are easily found online.

It isn't necessarily ridiculous for the CEO of a $2.7 billion organization headquartered in New York to make $600K a year. Likewise, the pope is "unpaid". This doesn't mean the Catholic Church is your best choice for a charitable donation.

• An organization's programming-to-overhead ratio doesn't always reflect their effectiveness. Sometimes, a high overhead percentage is due to reasons that won't be noted on a 990. I used to manage an orchestra that paid no fees for its hall or ushers and only a pittance for office space, saving hundreds of thousands of dollars each year. However, this made the staff salaries seem a larger proportion of the budget than would otherwise be normal for an orchestra of that budget size. Our 990 didn't show that we presented twice as many concerts with that budget as any comparably-funded organization.

Just because the claims on this graphic are wrong doesn't mean I endorse the charity. For instance, I don't care that the United Way president supposedly makes $375K. (In fact, that seems low to me for such a huge organization.) I do, however, care that The United Way is an incredibly inefficient way for you to make a charitable donation. They have their own bureaucracy and overhead to cover, and the charities have to spend labor hours (= $$$) applying for grants. You'll do a lot more good with your money if you take a half hour to find a charity to which you'd like to donate directly. It's like a 40% matching gift to thank you for your 30 minutes of volunteer time.

So, let's get to these assertions:

AMERICAN RED CROSS:
Marsha Evans isn't the CEO. It's Gail McGovern. She makes $500K. The ARC manages $2.72B in revenue. Her salary is 0.02% of their budget. That's nothing.

MARCH OF DIMES:
The mission of the March of Dimes is to fund scientific research contributing to reduced infant mortality. I don't know why a donor would expect such an organization to give any money to "the needy". (There's plenty of legitimate criticism noting that the March has lacked a mission focus since the eradication of polio, but that's not what's claimed on this chart.)

THE UNITED WAY:
Brian Gallagher actually makes in excess of $1.2M annually, not $375K ($532K of which is base salary). But this isn't why you shouldn't donate. See my note above.

UNICEF:
Caryl Stern earns $522K. She drives a 2007 Prius which she purchased used, not a Rolls Royce. UNICEF spends an insanely low 2.7% of its budget on administrative costs (including Stern's salary). Over 90 cents of your donated dollar supports programming.

GOODWILL:
Mark Curran is not and never has been the CEO. No one by that name seems to have any connection to Goodwill; Google has decided that the most prominent Mark Curran is the Sheriff of Lake County, Illinois. Goodwill is a registered non-profit and, as such, has no "owner." (See my note above about "profits" in a non-profit.) They have received criticism for taking advantage of (arguably antiquated) US labor laws allowing an organization to pay sub-minimum wage when hiring disabled employees, but no one is taking the profits home.

THE SALVATION ARMY:
The Salvation Army is an evangelical Christian organization founded by a Methodist minister. Its mission is to spread their religion, and funds collected are used to further this message. That's "the cause". They've been religiously (literally) and actively anti-GLBT in their programming and services, though they've wavered on this in recent years, at least in public statements. I'm not even going to bother researching their efficiency, because I don't care.

THE AMERICAN LEGION:
The American Legion is a politically-active organization that advocates for specific public policies. They have advocated against the separation of church and state, against the open service of LGBT service members, and they recently threatened to disband a post in Oregon for allowing the general public (non-veterans) to attend some events, including a sexual assault survivor group and a LGBT support group. No comment on their efficiency, except to say that it's not necessarily a mark of good management for an organization's head to be unpaid.

VFW:
Again, politically-active group. Check their advocacy. See if you agree.

DAV:
Same.

MILITARY ORDER OF THE PURPLE HEART (misnamed on the graphic):
The American Institute of Philanthropy gave them an F grade. Only 32% of funds were used for programming in 2007. A lengthy (and largely unresolved) controversy ensued, including allegations that this "unpaid" leader was funneling money to another foundation he ran.

VIETNAM VETERANS ASSOCIATION:
No group by this name exists. Do they mean the Vietnam Veterans of America? If so, the same caveats apply as to the Legion, VFW, and DAV.

MAKE-A-WISH:
Unless a dying child said, "I wish that this foundation could have an sizeable administrative staff that consumes 26.1% of its revenue", there is no way this assertion is true.

ST. JUDE'S:
Again... 100% is a ridiculous figure. The organization has professional administrative staff. Check the 990 for real numbers.

RONALD MCDONALD HOUSES:
"All money" may go to "running the houses", but that includes administrative staff and fundraising staff. "All money" in all of these organizations goes to "running the ____," if you interpret the phrase broadly enough 

LIONS CLUB INTERNATIONAL:
They have a sizable professional staff running their national and international offices. Again, not a bad thing, but it's misleading to say that "100% of donations" go to programs.

Chris MyersComment