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Things that bug me, including the opaque world of charitable giving.

Posted on Wednesday, June 12, 2019

Before anyone thinks I'm a mean grinch for griping about charitable giving, please let me explain!! In the past couple of years, I have become actively involved as a volunteer and board member for three very different non-profit organizations: Drive a Senior, an organization that provides free rides for seniors; St. Michael's Episcopal Day School, a pre-school based on the Reggio Emilia philosophy of early childhood learning; and Well Aware, an organization that develops sustainable water sources for communities in East Africa. What I've learned, aside from the fact that just a few people can make an extraordinary impact on many, is that there are no standards for reporting among charitable organizations. No standards results in a concerning lack of transparency. Many non-profits collect funds for a cause, and then promptly turn the money (after taking a hefty administration fees off the top) over to unrelated organizations to execute the mission. This isn't necessarily a bad things, but can add layers of cost, and can make it more difficult for the original recipient to act as a steward for the funds. Which brings me to the next thing that gets my goat...

Donations not serving the cause. When you make a contribution to serve veterans, save kitties, or feed the homeless, it's not unreasonable to expect that most of the money will be applied to that specific purpose. Many charities apply dramatically less than the full amount of donated funds to serve the promoted cause. Some amount of overhead is necessary, but without sound business practices prioritizing cash flow for intended projects, funds will be consumed by non-essential expenses quickly. And, to that end, charities with 100% of funds applied to projects may signal hidden accounting for expenses. Make sure that any charity to which you contribute is acting as a good steward of resources. Which brings me to my next point.

Post jobs for friends and family. The reality is that non-profits need qualified leadership to operate effectively, just like for-profit businesses. As such, it's necessary to provide a competitive wage to attract the right talent. My MBA professor reiterated that organizations operating as a non-profits function largely the same as for-profits. The difference is that "shareholders" are the audience or cause impacted and "customers" are the donors. Despite this, it's not uncommon to see charitable organizations create roles with big paychecks for friends or family who may not even be qualified. It's important to explore the employee structure of charities to understand who is employed by the organization, their affiliation with the founder, how their pay structure works, and whether it's comparable with similar charities. If you can't find the information (it's not required to be disclosed), it would be good to simply ask. Which brings me to some resources to find information.

Before donating to any charitable cause, no matter how noble the cause may appear, do some due diligence.
Just like when you hire a builder for a home, a lawyer for your estate, a CPA for your taxes, or a planner for your finances (hint, hint!), you want to make sure whatever is being purported is actually delivered. There are some widely respected websites with reviews of charities which can assist your due diligence: www.greatnonprofits.org www.guidestar.org and www.charitynavigator.org

The most important element of any charitable donation is passion. If there is a cause that has touched your heart or affected your family, make an impact! I just allowed my two middle school boys to not shower for a week during the Well Aware 2019 Shower Strike. The purpose was to raise funds and awareness for the water crisis in East Africa. Thankfully, we hit our goal, and car rides together were much more pleasant. (note: Axe body spray is not a good shower alternative) Empowering clients to pursue their passion... charitable giving, big vacations, education, whatever brings you joy... is our great passion! It's amazing to see how little it takes to make a big impact. Let us help you make a plan to pursue your passion!