Friday, May 27, 2016

For Where Your Treasure Is: Should I Give to Them?

One thing many of us hope for as we move toward retirement is to have enough money to donate to good causes.  One thing we do not want to do is to donate to charities that waste our money.  If you have spent any amount of time on facebook, you've probably seen the meme that denigrates Goodwill and the American Red Cross and urges people not to contribute because of the size of CEO salaries, among other things. This article will give you some guidance about which groups should get your donations.

Do you agree with the purpose of the organization, and how important is it to you?

There are a lot of groups out there vying for our money, but most of us have only a limited amount to give. Make sure the groups to which you give your support are groups that support your values.  I am pro-life, anti-abortion.  I don't care what good someone says the local Planned Parenthood clinic does, the fact of the matter is that Planned Parenthood actively supports, and often provides, services I find morally abhorrent--that's a very public fact.  On the other hand, I have no problem with "save the whale" campaigns, but they aren't high on my list of priorities either.  I won't go out of my way to donate to save the whales, but I may give a small donation if approached by the right person.

What is the purpose of the organization, and how good a job does it do?

The purpose of some organizations is drawing attention to the cause.  One way of doing so it putting on large public events, which also serve as fundraisers.  If you look at the organization's balance sheet, you may see that they appear to spend a great deal of money on fundraising, but when you look more deeply you see that the fundraiser also served to publicize the issue.  On the other hand, some charities just plain spend too much money on overhead.

How does the size of the overhead compare to the size of the organization?

The CEOs of national organizations with billion dollar budgets and thousands of employees get paid in six figures.  Is that too much?  The answer is simply, it depends--but probably not.  Running the American Red Cross, an organization with branches in every state and many communities, is not a job for an idealistic fresh-out-of-college twenty-something.  It is a job for someone with significant management experience who could easily get another job.  How much money do you need to pay to attract the right person to the job, and to keep them there?  That's the question to ask about salaries, not whether the CEO makes more than you do.  If the organization is a local food pantry open a few hours per week and staffed primarily by volunteers that has a client base of one hundred families, then you don't want to see a large line-item for salaries.

Can you donate to a particular project?

It is easy to say "no" to a charity if you disagree with its goals and/or activities.  To stick with my example, Planned Parenthood isn't getting any of my money if I can help it.

It is easy to say "yes" to organizations you wholeheartedly support.  My church gets a donation from me monthly and I don't try to micro-manage how they spend it as I support their whole mission and believe that in general they spend money wisely.

However, there are times when you support particular projects of an organization but not the organization as a whole.  For example, you may be fine with donating to my parish's food bank, since you know the donated food feeds the poor who come to the door, no matter who they are, but be opposed to the doctrine of my church and not want your money spent to promote or spread that doctrine.  Many organizations will allow you to direct donations in a meaningful way, and others allow it in a paper-shuffling way.

You may support your alma mater but believe that the current administration is wasting money on foolishness while neglecting something you support.  Most universities will allow you to direct your donation to a pet project or to scholarship, or will allow you to donate equipment.

On the other hand, the United Way will allow you to direct donations but that is a paperwork exercise.  The United Way accepts requests from member organizations, and creates a budget directing  a certain amount of money to each organization.  If I direct my donation to the Girl Scouts, it means they use my money to fill the Girl Scout's allocation.  It does not mean that the Girl Scouts get more, unless so many people direct their donations to the Girl Scouts that it overfills the budget.  The United Way allows me to opt out of supporting a particular group, but if I opt out of supporting XYZ, they will simply use your money to support XYZ and send mine to another group. The only way XYZ gets less money is if so many people opt out of supporting XYZ that there isn't enough money available to fill it's budget.  

How do I get information on an organization's spending?

Most non-profits will mail you some sort of financial disclosure upon request.  Guidestar has tax filings and other data.  I now know that the CEO of Girl Scouts Louisiana East makes over $100,000 per year and that the average employee makes $18,000 per year (hopefully because there are a lot of camp counselors who are paid low wages for a short time during the summer who skew the average). 

So, should I give?

Yes, you should.  To what?  To organizations that effectively work for causes you support, to those who make wise use of your money and to those that do those things in  your community.  If you generally support the mission of the organization, do a little research and make sure that the organization is effective and efficient.  
Disease Called Debt


  1. There are a handful of charities I donate to at different times of the year, they each have causes I believe. But with that said, I haven't looked into how they spend their money too much so far. I definitely will now though.

  2. Great information. I definitely use websites like Guidestar to help determine which charities receive my donations. It amazes me how much overhead some organizations have, and while I understand your point about awareness, I still like to see the programs receive the bulk of the budget.

  3. It can be difficult to decide who to give your money too, these are some great points to look at when making that decision.