The Dark Side of Non-Profits

Money lost and found in the pockets of charity officials

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The Dark Side of Non-Profits

Rebecca Charno, Becky Han, Brittany Polevikov, Noah Sollinger, and August Zeidman

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It’s around the winter months when most people choose to make considerable donations to charity.  Nearly one third of all donations occur in December and the following winter months, as many aim to fulfill their New Year’s resolutions, which for many may include a promise to be more charitable.  But before you decide to put your money towards a cause, have you done your research on where the donation is actually going?

According to a recent poll done by The Schreiber Times, only three percent of students would do absolutely no research before donating to an organization.

Not only do people not research where their money is going, but many also fail to understand that not every single charity is truly dedicated to a good cause.  There are some charities that exploit their donors by pocketing donations, participating in fraud, misusing contributions, purposely avoiding tax deductions, or simply exploiting the people or organizations that will be receiving their money.  

For instance, the average salary of charity CEOs in the United States is approximately $130,000, a number that is disproportionately supplemented by donor money.  Also, a 2013 expose published in the Tampa Bay Times uncovered that for 50 U.S. charities, less than four percent of their funds were used for charity-related activities.  The remaining 96 percent went towards the paychecks of charity founders, operators, and solicitors.

Unfortunately, all of these examples of corruption are commonplace in the modern system of charities.  Therefore, it is essential to be aware of where money should and should not be going.

One of the most corrupt charities out there is the Kids Wish Network which seeks to grant wishes to children with life-threatening medical conditions.  According to their mission statement, this 501(c) non-profit is “dedicated to infusing hope, creating happy memories, and improving the quality of life” for these children.  However, since its creation in 1997, the organization has been accused of using virtually none of their funds for charitable work, whilst instead utilizing this money to raise more cash multiple times.

Moreover, according to a charity navigator spokesperson, the organization was utilizing tax loopholes in order to reclassify their spending on fundraising as charitable work.  According to CNN, for every dollar raised by the organization, only a mere three cents were spent on actual wish granting activities.

To make matters worse, the same report found that the organization has spent several million dollars since 2010 on services provided by companies owned by Mark Breiner, the charity’s founder who retired prior to this spending.  Due to these findings, the Tampa Bay Times report declared that the Kids Wish Network is the worst charity in America.

Another corrupt organization is the HonorBound Foundation.  Many Americans know of friends, family, or community members who may be veterans of military service, so the corruption that exists in this organization truly impacts everyone.  Taking care of veterans, or others impacted by war, is often highly regarded among the public. Not only that, but also the issues faced by veterans are extensive and range from financial to mental health challenges making them a uniquely affected segment of society.

Yet, if you would like to donate money and help make someone’s life easier, look again if your considered target was the HonorBound Foundation.  Based in Darien, Connecticut, but operating nationwide, this is yet another in the long line of organizations taking advantage of people’s charitability to keep money for themselves.

Out of the approximate $8.5 million raised in 2017, only just $500,000 actually went towards benefitting veterans.  Nearly $7 million was spent on fundraising activities and over hundreds of thousands of dollars more were spent on executive salaries.

This is a common characteristic among corrupt and deceptive organizations.  They have had to change their name several times in the past to avoid bad press.  For instance, they were formerly they were known as the National Veterans’ Service Fund.  Nevertheless, they are still around and still maintain their tax-exempt status, allowing them to continue to scam both donors and charity recipients.

Even GoFundMe, a for-profit company that facilitates donations with a meager 5 percent profit and 2.9 payment processing fee collected on each donation, has its own catch.  As stated on their website, “all donations are at your own risk… we do not and cannot verify the information that Campaign Organizers supply, nor do we guarantee that the Donations will be used in accordance with any fundraising purpose described by a Campaign Organizer or Charity.”

Though a lack of reliable money transfer is always a risk when donating through a business, GoFundMe has such a large platform that it is additionally susceptible to viral fundraisers.  

A perfect example of this is the recent GoFundMe campaign to build President Donald Trump’s wall along the Southern border, which collected a whopping $16 million.  Such a fundraiser not only takes away the legitimacy of a donation website, but also directs money away from other, longer lasting charities that didn’t gain momentum overnight.  

GoFundMe allowed this charity to become a viral sensation in a matter of 3 days.  And, with that, who is to know whether this money will truly go towards the border wall.  If the wall never gets built, will the American people ever get their money back? Because of this easily accessible website, thousands of people pooled their money into a possibly illegitimate cause.  This example also emphasizes the importance of researching an organization before donating to one.

The National Caregiving Foundation, founded in 1985, primarily focuses on Alzheimer’s Disease, a heartbreaking and devastating disease prevalent in the United States.  Since researchers are only beginning to understand its causes and how it can be worked to prevent its onset, it would make sense that there are many organizations that raise money for the purpose of contributing to research and care of the disease.

As unbelievable as it is, the National Caregiving Foundation spending on their own operations (fundraising, salaries, administrative fees) exceeded all contributions received through donations; almost $2.3 million fizzled away and absolutely none of it going towards the those that the organization claims to be helping.

This obvious greed and financial irresponsibility is only one of the many tragic examples of innocent people needing care, and foundations failing to help them.  Similarly, every instance of deceit and corruption makes it impossible for charities to do their job. The unfortunate truth is that charity corruption is well and alive.

Because of this corruption, the number of Americans engaged in charitable giving has trended downward since the beginning of the 21st century according to a recent study by the Chronicle of Philanthropy.  In the span of almost a decade and a half, the share of Americans donating to nonprofit organizations fell by some 11 percentage points, from 66.2 to 55.5 percent.

Essentially, finding out that many of the charities we are donating to aren’t even using most of the money to benefit the cause is demoralizing and makes people less inclined to donate.

So, in this mess of corruption, it can be extremely difficult to find the motivation to donate to these charities.  Likewise, it is equally as difficult to determine where you should put your money. By avoiding the previously mentioned companies, or companies that share the same characteristics, and considering the following tips, one can decide which organizations are worth the donation.

Avoid charities that won’t share information or pressure you into donating.  Reputable nonprofits will have their programs and finances available to the public, will not use intimidation tactics, and will gladly take any questions you have

Donate to causes that reflect your interests and passions.  Whether it be the environment, education, hunger, animal welfare, or research, finding a cause that hits close to home will make you feel more confident about your decision to give your money to them

Besides donating money, consider donating your time and energy!  Some nonprofits are sorely lacking in manpower, especially smaller ones, so your volunteer efforts will not go unnoticed.  Even volunteering for a local club or grassroots society in town can do more than perhaps a small donation can. Plus, having hands on experience with an organization can help you determine if truly support it and maybe even help you continue to be involved in it both financially and emotionally, and having this kind of work on a resume never looks bad.

Try to look locally or regionally.  Not only are you benefitting your nearby area, you are supporting an organization that is most likely smaller and more in need than bigger charities who funnel a large majority of their donations towards overpaying their administrators.

All of these tips can help you navigate a messy world of corrupt charities.  Also, they can help you to put your money, and your time, towards things that will truly make the world a better place.  Ultimately, though, the best thing to do is research.

Websites such as charitywatch.org, charitynavigator.org, and consumerreports.org help provide transparent statistics of how specific charities are using your money. On charitynavigator.org, one click can lead you to a page full of information on the mission of the chosen charity, the financial assessment given to the charity by analyzers, and a score out of 100 for the overall accountability and transparency of the charity.

All of these resources can be extremely helpful in deciding whether or not a charity is worth your donation by reviewing the charity’s history of performance and compare it side by side with similar organizations serving similar groups .

If you don’t have a significant amount of time to execute this research, a quick search on Google can give you a general overview of the program, administrative, and fundraising expenses of the organization you are looking into.

Nonprofit Organizations do some of the most crucial and significant work to assist those who aren’t fortunate.  However, the sad reality of corruption and misleading marketing found in some of society’s most well-known charities begs the question of where our money is going- and how we can put our donations to a truly good cause.  

By considering the previously mentioned tips, and acknowledging which charities have proved to be corrupt, your time, resources, and efforts can truly implement positive change.  

 

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