Charities - overhead vs programs

[beaverlodge]

Is this now a growing bureaucratic industry full of well paid executives and staff with increasing little concern for those with real needs?

Or are they well intentioned people concerned primarily with the charitable causes they represent?

They can expect a flood of money now.

[jiHymas]

Is this now a growing bureaucratic industry full of well paid executives and staff with increasing little concern for those with real needs?

What do you mean, "now"?

[Norbert Schlenker]

They can expect a flood of money now.

I assume you mean because of the abolition of capital gains taxes on donated securities. It might make a difference but I have to say that I had a devil of a time under the old regime explaining to investors why it was crazy to make donations in cash if a charity could accept securities. I can't imagine it will get that much easier.

a growing bureaucratic industry full of well paid executives and staff with increasing little concern for those with real needs?

You always have to be careful.

A few months ago, I started noticing ads - mostly on BBC Canada I think - asking for donations for the Leprosy Mission. They're a registered charity, in business for a long time. The ads show a cute girl - in India by the looks of it - who needs treatment for leprosy. To make the point, they show an old woman who has a malformed nose and lost many fingers. The message is clear: Don't let this cute little girl turn into that old crone.

The Leprosy Mission wants $350 to keep the girl healthy. That sure sounds plausible, doesn't it? Here's the kicker. If you look up leprosy treatments on the Web, it turns out that it's a course of pills over a period of 6-12 months. The pills cost about $50, not $350. That $50 is covered by an existing WHO program, i.e. the UN has sufficient funds to cure every single case of leprosy in the world, at no cost to the patient.

So what exactly is the Leprosy Mission spending that $350 on? (It's not just $350 either. According to CRA, they collected and spent $4.7MM in 2004.) They did spend half a million on advertising and $800k on salaries and $275k on consultants and of course the all important $2.8MM on other, but I am dead certain that they spent $0 on pills to combat leprosy.

[Bylo Selhi]

So what exactly is the Leprosy Mission spending that $350 on? (It's not just $350 either. According to CRA, they collected and spent $4.7MM in 2004.) They did spend half a million on advertising and $800k on salaries and $275k on consultants and of course the all important $2.8MM on other, but I am dead certain that they spent $0 on pills to combat leprosy.

Hence my question in the Budget 2006 thread, "Why should we suppose that administrators, fundraisers and other assorted bureaucrats in the charity industry will, in general, spend our money any more carefully or wisely than their equivalents in Ottawa?" Seems that in this case, UN/WHO are doing their job.

[beaverlodge]

Looks to me like the growing charitable giving sectors are increasingly one big bureaucratic hungry part of our economy.

And getting hungrier.

It is a dilema. Many like and want to give to charities both with their time and their money.

But , and this is a big but, I suspect there are a lot of hypocritical well paid executives and staff in these organizations who could not be suitably employed in other parts of our economy other than scooping up money and tax credits from as many sources as possible.

Proceed with caution. Watch and ask big questions of any charity.

Where is the money going?
How much do you get paid?
What are your percentage admin costs?
Show me Show me Show me

[dakota]

But , and this is a big but, I suspect there are a lot of hypocritical well paid executives and staff in these organizations who could not be suitably employed in other parts of our economy other than scooping up money and tax credits from as many sources as possible.

Isn't there a registratiion requirement that no more than 15-20% be spent on administration? Maybe I'm thinking of something else?

[Chuck]

I'm hoping (but I realize I am being delusional) that if the new tax rules result in increased private donations, that goverment funding of charity could be reduced, and the saved revenue be used to lower general tax rates.

My standard rebuke to charities is: "I give through taxes". I'd love to see the day where taxes are reduced to the point I would feel an obligation to donate based on my own free will.

[Bylo Selhi]

Check out Top-10 Charities Drowning in Administrative Costs. Granted, they're US, but the numbers are eye-popping.

(Maybe I should start a charity for victims of popped eyeballs from reading charities' financial statements or websites that report on them...)

[Brix]

Why should we suppose that administrators, fundraisers and other assorted bureaucrats in the charity industry will, in general, spend our money any more carefully or wisely than their equivalents in Ottawa?

Ah, but in giving, "it's the thought that counts."

On the whole we're more satisfied by the good feelings we get from voluntary donation than by dutifully paying taxes and throwing our energies into the political process (or any other) on behalf of care and wisdom in spending the money collected.

The charity industry knows this, surely. Not only do charities have to spend most of their energy on marketing, soliciting and nagging, those chores would be even more demanding without the ability give tax receipts, and there would be even more concentration on the entrepreneur's prime responsibility -- to deliver consumer satisfaction. Since from the entrepreneurial point of view the consumers of charity are the donors, not the recipients, the main thing is that the donors feel good. How that satisfaction is produced is secondary.

[Small Investor Activist]

Who ultimately pays after someone receives a charitable credit. Are ordinary taxpayers subsidizing wealthy philanthropists interests with the government collecting less revenue due to their gifts

[crossroads]

There are some articles in a couple of Ontario papers about how much MADD Canada is actually spending on its programs and, more importantly, how much is being consumed by overhead. Here is one link:

http://www.thestar.com/NASApp/cs/Conten ... 8793972154

I recall that there is a rating service or group that montiors a large number of Canadian charities and provides info on the percent that actually goes to use in programs vs being used by administration costs. Can anyone provide a link to that information?

[Norbert Schlenker]

Another egregious case of charitable excess.

A story published in the Saturday Star revealed that Mothers Against Drunk Driving Canada has such high costs that only about 19 cents of every dollar goes to victim services and the fight against drunk driving.

http://www.thestar.com/NASApp/cs/Conten ... &t=TS_Home

[Another thread here. ]

[chiaroscuro]

Oh please..., you bunch of sad sacks. You can't honestly believe that charities have it too good, or that they are generally hopelessly overrun by bureaucrats on the institutional dole. They get paid to do a job just like people do in private business. While there are charities that are fraudulent or skim too much there are also many businesses that are fraudulent or CEO's who skim too much. Buyer beware...or contributor beware. Here is a helpful tool to help you select good charities.

http://www.give.org/seal/participants.asp

your welcome

[brucecohen]

http://www.give.org/seal/participants.asp

your welcome

Problem is that's a US site. There are several. The IRS releases much more information from the charities than Canada Revenue does. There was a Canadian site but it didn't last very long.

I check out US charities on http://www.charitynavigator.org

[brucecohen]

I recall that there is a rating service or group that montiors a large number of Canadian charities and provides info on the percent that actually goes to use in programs vs being used by administration costs. Can anyone provide a link to that information?

The Canadian rating service that I know of shut down. It was run by a couple of guys on a shoestring.

[Yoder]

I spent a few months volunteering at the Leprosy Mission in Naini India a few years ago. Just thought I'd point out to Schlenker that the leprosy mission website has some of the answers to his question:

So what exactly is the Leprosy Mission spending that $350 on?

From their website:

The cost to bring the cure is about $350 per patient per year. This cost covers community education, distribution of medication and essential ongoing support. It also covers necessary surgery, rehabilitation, vocational training and aid in re-integration into the community.

The website iterates in more detail what else they do...

[rant]

From your comments later regarding the leprosy mission not needing to purchase pills (because they are free), it seems to me you may have an understanding of leprosy that is possibly incomplete. Surgical intervention via tendon transfers / amputation and stump modeling / reconstructive surgery (for disfigured facial features, for instance) and wound debridement etc... is part of treatment. As is community surveillance of populations at risk by health workers trained from the community. Laboratory costs shouldn't be overlooked - it still takes a technician to take a blood sample and manually examine the smear to confirm the diagnosis. OT / PT / nursing etc are all required... As well - the leprosy mission supports research efforts...

In my opinion it is simplistic for you to imply (if I read you correctly...) that because the pills are "free", the leprosy mission is not spending its money wisely.

Remember also that leprosy, like malaria, and tuberculosis, continues to be a significant health burden in some parts of the world and receives relatively little research money simply because it doesn't hit the radar of our (i.e. the West) health agenda. As you may know, Pharmaceuticals that we invest in are little interested in R&D for drugs that don't affect the West. (think Lipitor, Viagra, as examples).

[/rant]

Yoder

[beaverlodge]

MOTHERS AGAINST DRUNK DRIVING (MADD)

That rating service may be on a shoestring but MADD sure is on a high.

The article in the STAR was very clear that an extremely high percentage of the money collected for MADD goes to those who collect it.
They were also clear that MADD in their literature to the public said exactly the opposite.

As for the small percentage going to the DRUNK DRIVING CAUSE it looked as if much of that was for education.

I would doubt that MADD has has much impact where it really counts - drunk drivers taking the lives of innocents.

However they do have more than $5,000,000 in their retained earnings and they have an executive director who will not answer questions and is at odds with the rules as outlined by Charities Canada.

And of course they have a bureacracy that needs to get paid. After all it is Christmas.

[brucecohen]

Here are CRA's disclosure pages on MADD.

As I noted elsewhere, unfortunately CRA disclosure on Canadian charities is not as good as the IRS disclosure on US ones.

[beaverlodge]

Charities are anxious, in fact it seems they are almost in a panic to get charitable status.

There are 1500 new charities each year added to the already approx 80,000 now registered in Canada.

Is this for the donors?
The charities?
The bureaucrats?

One can only HOPE

[Norbert Schlenker]

Yoder, it's always good to get a first hand account, even if it results in me having to .

I would still like to know why the commercial asks for $350 with the implication that it goes to save the cute little ten year old from leprosy. There isn't any tendon transfer or amputation or reconstructive surgery in her future, is there? It's a blood smear, a culture, and six months of free pills. $350? I don't think so.

The financial disclosure gave me (and to be honest, still gives me) no confidence that the bulk of receipted contributions are being well spent, but I would be happy to have my skepticism disproven by your own personal knowledge.

[InvestingQueen]

The article on MADD was very timely for me.

I was ready to give a good $ to them.

An extended family member was hit by a drunk driver on July 15 and remains in a coma at the Ottawa Civic. Poor Chris is only 20 years old.

It is a horribly distressing situation that has caused myself and many others so much grief.

Now that I know what I know about MADD, I will figure out another way to contribute to the elimination of drunk driving (short of killing the BAS****).

How distressing to know that 85% of the $ raise go to "administration" - Yikes. Their press for the public portrayed a very different impression - I had printed it off earlier

Good for the Toronto Star, investigate, gets the cold hard facts and present it - that is good news.

Same on you MADD - a great cause hijacked by the "professionals"

[xerxes]

Registered charities have to submit a 3010 annual return, this shows all their costs, and the portion applicable to charitable activities. the rule of thumb is 80% charity and 20% admin. it rarely works out an even 20% each year, you are allowed to c/f differences from year to year.

[blonde]

Study the SYSTEM used by a 'charity'...along with ALL of the processes (formal and informal) linking to many (visible and invisible) sub-processes. Include 'MONEY' as the primary metric. Follow that 'MONEY' and do not be surprised to learn that for some reason the 'MONEY' seems to wear-out...iow, just disappear...Hmmm!!

Why are the riteous-do-gooders such good salespersons?

Why is 'Milking' such a fine Art?

It appeared to be 'bad' when 1 in 5 employees was involved in fraud...well now it is moving towards 1 in 4...is that good or bad?

Why does the 'policy' allow this to happen?

Don't Trust Everybody.

BTW, trust me, believe me.

[Taggart]

Here are CRA's disclosure pages on MADD.

As I noted elsewhere, unfortunately CRA disclosure on Canadian charities is not as good as the IRS disclosure on US ones.

a) the gross revenues collected by the fundraiser(s) on behalf of the charity
5450 $ 8,934,139

b) the amounts paid to and/or retained by the fundraiser(s)
5460 $ 1,183,333

c) the net fundraising revenue received by the charity (line 5450 minus line 5460)
5470 $ 7,750,806

When looking at similar figures from the CRA site for other charities in the past, I thought they would give me a rough percentage of what was actually going to good works. I guess I was wrong.

[Bylo Selhi]

MADD rejects 'disgruntled' critics

MADD Canada's top official has called a group of relatives of drunk driving victims who complained about his charity "disgruntled" and lashed out at the Star for exposing its high fundraising and administrative costs. "The Star's investigation smacks of `gotcha' journalism," chief executive officer Andrew Murie said in a statement released yesterday. "It is unfair and obviously very hurtful to the many thousands of volunteers who put their heart and soul into the organization."

Lots of righteous indignation but no response to the Star's contention that less than 20% of funds raised is used for good works or for a breakdown of how the $1M+ in salaries and benefits along with $1.4M on "administrative expenses" is spent actually