Research charities before you give
A deadly tsunami in Thailand. Earthquakes in Japan. Famine in Africa. Whenever disaster falls upon some remote part of the world, Canadians willingly hand over their spare change at the grocery till or write a cheque at a local bank.
But now a massive flood has brought devastation here, and cashiers across the country are asking customers to help flood relief efforts in Calgary. It’s somewhat surreal to think that we are the ones asking for and needing help, although it’s a good reminder that we should all give when we can because, at some point, we all need the help of others.
That said, we often find ourselves in a dilemma as we consider where, among a multitude of charities doing the same thing, to put our money.
Some organizations are now responding to this problem by giving donors the kind of information they need to make sound decisions. That is, the efficiency and accountability of charities is now being studied and publicized.
This week, Moneysense magazine released its 2013 evaluation of Canada’s 100 largest charities, and it is reassuring that two of the topranked charities are providing disaster relief here.
Samaritan’s Purse and the Canadian Red Cross both received the top grade of A+, when evaluated for efficiency of fundraising, governance and transparency/accountability. Samaritan’s Purse spends 90.1 per cent of money raised on its programs, while the Red Cross spends 88.5 per cent. That means just 10 per cent (approximately) is going into administration, salaries and fundraising. That’s good news for both donors and those receiving aid.
Both groups were also ranked highly in 2012, so their success isn’t just an anomaly on the scale.
Unfortunately, there are growing numbers of reports suggesting that charities are spending too much money on administration, salaries and fundraising.
There is a trend to host extravagant galas or to pay big money (for charities that don’t have money) to speakers like federal Liberal Leader Justin Trudeau as a means of drawing a crowd and raising funds. But it’s a gamble that doesn’t always pay off.
For example, a Vancouver Sun investigation recently revealed where the money goes at the well-known Rick Hansen Foundation. It highlighted a star-studded gala that cost $1.95 million to host, yet raised slightly less than $275,000. It also raised questions about Hansen’s annual salary (more than $400,000) and a $1.8-million tax receipt that Hansen received for giving the foundation the right to use his name.
Despite receiving annual donations ranging from $22.4 million to $27.2 million over the last three years, the foundation finished its March 31, 2012, year end in the red, with a reported loss of $8.1 million. That was followed by another $3.3-million loss during April and May 2012. During 2012, the amount spent on salaries and benefits increased by a whopping 84 per cent.
The foundation recently announced a $20-million grant to fund spinal cord research. But, if you read the fine print, it will be delivered at a rate of $2 million per year for 10 years. If the Hansen foundation is raising about $25 million annually, and giving $2 million per year for research, where is the rest of it going? Public awareness and patient support certainly require significant funds, but if donors think their money is going toward research and a cure, they are probably mistaken.
Another example is the 2011 CBC Marketplace investigation of the Canadian Cancer Society’s financial reports over 12 years. It found that the proportion of money dedicated to research dropped from 40.3 per cent of every dollar in 2000 to less than 22 per cent in 2011. Over that same period, fundraising expenses rose from 26 per cent of every dollar raised to almost 43 per cent.
So, how much of your money is really going toward the cure?
The 2012 Moneysense charity rankings gave the Alberta/ N.W.T. division of the Canadian Cancer Society a C for overall efficiency. The division has annual revenues that average about $20 million, yet just 43.3 per cent of these funds go to programs.
My intent is not to vilify these charities, but to inform donors, who give in good faith, that they always have choices and they need to do their research before handing over the money.
There will never be cures for anything (or sufficient aid for disasters) if donations are primarily used to perpetuate a bureaucratic fundraising machine.