Give With Care
Many veterans ‘charities’ waste donations
AS Americans celebrate Veterans Day, many will show their support by donating to veterans’ charities. Billions of dollars will be given this year in honor of the nearly 18 million US service veterans.
And much of the money will undoubtedly help those vets and families in need.
But millions will be wasted. In some cases, well-intentioned donations will end up in the hands of unscrupulous actors who will pocket most or all of the donations for themselves. Other charity executives may be incompetent: Though well-intentioned, they have no business running a 7-Eleven, let alone a multimillion-dollar organization.
This weekend and throughout the year-end giving season, it’s not easy for donors to figure out whom to support.
Most Americans have never heard of an IRS Form 990 (the tax return for charities), nor could they analyze the spending practices it tracks.
People respond more to ads and slick mailings than to hard financial facts.
As veterans, we are especially sensitive to the need for donor dollars to end up in the right hands.
The stakes are too high: Millions of vets struggle to live civilian lives, with anxiety, depression, and even suicide all too common among those who proudly served their country.
Given the number of veterans with acute needs in 2023, it’s all the more vital for nonprofits to act in good faith — and for donors to reward the good-faith actors.
This is where third-party charity evaluators come into play.
Fortunately, several charity-rating organizations aggregate information on nonprofits for givers to consider before ever donating a dime. Charity Navigator, CharityWatch and the RAM Veterans Foundation are a few.
RAM’s Charities for Vets is an especially pivotal player: Its CharitiesForVets.org website reveals billions donated annually to just 105 organizations that share “Recommended” or “Not recommended” status.
Alas, not all charity evaluators can be trusted. There is no standardized rating process, with different evaluators attributing importance (or not) to different factors. In many cases, the evaluation process contains stark differences of opinion, including what should be graded or what weight should be given to each factor.
Example: Both Charity Navigator and CharityWatch recently rated five veterans groups.
Charity Navigator gave its top grade (“four stars”) to all five organizations, yet CharityWatch gave the same five groups an “F” for financial integrity. These differing grades are not outliers; they happen all the time.
Givers should keep in mind that many veterans groups spend massive sums on administrative overhead, rather than programs that help veterans directly.
With that in mind, donors need to reward the charities that keep overhead expenses to a minimum.
Per Charities for Vets, many well-known groups devote less than 10% of revenue to overhead expenses, while others squander 50% on such expenses before they spend a single dollar on vets.
And yet, not all charity evaluators even see overhead as an important financial factor.
Some ignore how much money is being invested while the organization conducts fundraising.
Preserving some assets in a rainy-day fund makes sense, but groups that are retaining five to 10 years of reserves are holding back too much money that should be helping vets.
When people give their hardearned money to charity, those who honor their intentions should be the ones managing it.
Another issue: Most charity evaluators use some form of averaging good and poor financial management practices before rendering a final grade.
But should that be the case? If an organization is failing donors in a critical area, such as excessive overhead, should the evaluator “average” in that score with other, better-performing areas?
A better approach is a strict pass-fail test, which Charities for Vets employs when identifying those who come up short.
Any failure of a standard results in a clear and simple “Not Recommended” evaluation.
This Veterans Day, many will pay respects in different ways.
Some will fly flags, others will visit grave sites and some will part with money needed by those who have defended our country.
For Americans who have the resources to contribute, we praise and strongly encourage their generosity.
But please: Do your research and give wisely, so your decency and goodwill is not squandered.