Charities “Stockpiling Your Money?”

A MNA staff member recently brought to my attention the “Top Ten Lists” that are on the Charity Navigator website (a well-known charity watchdog group). The lists range from “10 Charities Drowning in Administrative Expenses” to “10 of the Best Charities Everyone’s Heard of” and 10 Charities Stockpiling Your Money,” which included the name of a Michigan charity. In fact, there are 11 Top Ten Lists.

As I reviewed the lists of charities, I wondered if Charity Navigator staff actually called the charities and looked at the programs and activities of those charities they listed, or whether they simply took at face value what the charities had said on the Form 990s or other financial statements. While the Top Ten Lists may be interesting, and in some cases enlightening, I think there may be much more, or less, to the story than meets the eye.

Flickr user: borman818

Flickr user: borman818

For example, some of the charities “stockpiling your money” may have some good reasons for the stockpile. I wonder if the Charity Navigator staff called the Washington, D.C. Martin Luther King, Jr. National Memorial Project Foundation to ask whether the “stockpile” is to build the memorial, which, I believe, is still in the planning phases. I wonder if some of these charities have capital campaign funds to build new facilities or if they might be in the first year or two of a five-year grant period in which most of funds have been distributed but not expended.

Did Charity Navigator staff visit World Wildlife Fund, and did they talk to the telemarketers who do their fundraising to see if the telemarketers provide accurate information to donors? What does Charity Navigator mean by “best?” Is it just that World Wildlife Fund had good numbers and percentages on their 990? I think donors should have the benefit of more complete information before deciding which charities to support.

My point is that donors are wise to use available tools like Guidestar, Charity Navigator, the Better Business Bureau Wise Giving Alliance, and information from the Attorney General’s Charitable Trust database to help understand what charities are doing with their donated funds. But, donors need to go further and also ask the charity and maybe others who know about the charity’s work, especially if the apparent facts raise questions. I know from more than a few years of reading figures on 990s that some charities really do try to disguise the fact that they are doing little or no charitable work while operating aggressive fundraising campaigns. BUT, I also know there are other charities that fail to tell their good stories on IRS forms. For example, some of the most productive community charities put most of their expenses in the “administrative” category when those funds were actually used to pay the expenses of their charitable programs.

Donors and charity watchdogs must not deny themselves the opportunity of learning both sides of the story; and charities must be ready and willing to explain their programs and their stewardship of funds.

Note: This post is authored by guest blogger Marion Gorton. Marion previously worked as a charitable trust administrator for the Michigan Department of the Attorney General, administering the office that oversees charities. Since retirement from the AG’s office in December 2005, she has worked at the Michigan Nonprofit Association as a program specialist and public policy specialist.

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One Response

  1. Great post, and a wonderful example of the importance of due diligence on behalf of the donor. While reporting requirements only show an abridged view of funds raised and used, asking some of these questions could help a donor from making a quick or inaccurate judgment about a charity. With the rapid growth in the number of public charities, the decrease in the prevalence of the media, and the growing need in our communities, every donor has the responsibility to ensure that their contributions are spent in the most effective manner. Nonprofits can help donors in this effort by being increasingly transparent in their operations, and by publishing both qualitative and quantitative reports online.

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