Archive for March 24th, 2012

If the cause is good, people tend to believe that the charity is, too. Without any investigation, we usually accept a charity at its word, glad to hand over our money in exchange for the feeling that we are making a difference.

In practice, though, some charities or non-profit organizations are less worthy of support than others. Few are outright criminal, but some are incompetent. Many, too, are less interested in achieving a specific goal than they are in keeping themselves going to provide careers and a sense of accomplishment for their executives and employees.

So how can you tell whether a charity deserves your support? There are no firm guidelines, but here are eleven indications that you might want to investigate further and reconsider where your donations go:

  • The charity lacks detailed views or policies: the charity has a general cause, but information about its exact positions or goals is unavailable. If the organization releases information that is supposed to explain its positions or statements, the information is so overly generalized that it tells nothing.
  • The organization lacks transparency: little information is available about what the organization is doing, and why. Reports on the group’s activities are either not made, or else full of generalizations and obviously selected specifics. When someone requests more details, they may be refused or delayed, or receive information that tells nothing.
  • The charity is always fund-raising: most charities gladly accept donations at any time. However, if a charity is always starting a campaign every few months, that may be a sign that its cause is not viable or that it is being inefficiently run, either because its basic expenses are too high or because its ambitions are too grandiose.
  • The lines of authority are blurred: a well-run non-profit follows standard business practices to help ensure that it is above-board. For instance, the treasurer should not be the same person who has the main responsibility for spending decisions or benefits from them. Similarly, the executive director is the senior employee, and should not control the board of directors or serve on the board.
  • Governing bodies seem to have little power: Either advisors and directors are not consulted at all, or else their input is confined to specific questions or trivial matters. For example, they might be asked what thank-you gifts will be given donors in a fund-raising campaign, but not for ideas about how the campaign will be run.
  • Achievements are slight or exaggerated: minor successes are exaggerated to create the impression of activity. Blogs, news releases, or year end reports are full of non-news, or the same news endlessly repackaged.
  • The creation of a community is ignored: a non-profit may rely on the public or target corporations for income. Either way, it needs a community to accomplish its goals. Indifference to the need of community-building might suggest that the group is more concerned with perpetuating itself than accomplishing anything.
  • The charity presents two different faces: to donors, the charity may be friendly and seemingly open. However, to employees, its executives may be dictatorial and overbearing. Such dichotomies suggest a charity that is not going away in a hurry, and that may have settled down to acting much like a corporation.
  • No opposition is tolerated: instead, opposing views are discouraged along with discussion. Rather than a group working towards a common goal, the organization’s lead employees and volunteers resemble corporate types engaged in a power struggle.
  • The charity is built around a cult of personality: One or two people, usually the founders, feature prominently in all publicity. If not generally famous, they are at least well-known in the circles in which the charity operates. They may talk a good talk about the cause. They may even declare themselves against cults of personality. Yet, somehow, publicity for the charity is all about them, and they expect deference from everyone else.
  • The charity’s expenses are excessive for their activities: How much a non-profit spends on salaries, office space, and travel is by far the most common way to evaluate a charity. A widely accepted general rule is that a well-run charity spends 20-35% of its income on these basics, and that a charity that spends over 60% should not be supported. Alternatively, compare the ratio of expenses to income to get a figure that shows how much a company spends to get $100, and read the results using the same percentages as for general expenses. Be sure to look over several years if possible to avoid making decisions based on a year with unusual, but justified expenses.

Except in the most obvious cases, one or even two or three of these signs is probably not enough to make you stop supporting a charity or non-profit. If nothing else, you need to judge by results. Even a group that spends 70% of its income on overhead might be worth supporting if it is hugely successful in accomplishing its aims. By contrast, a group whose overhead is 10% of its income might reduce costs by placing unrealistic demands on volunteers.

However, if a number of these signs occur – certainly over half – the odds are high that something is wrong and you need to reconsider your support.

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