I have to direct your attention this morning to a monster piece in Tampa Bay Times titled: America’s Worst Charities.

Aside from the obvious Pulitzer Prize potential, the series is a fantastic look at the massive waste of money – donated in good faith by people who have reasonable expectations that the cash would actually do some good to people in need. Instead, the worst charities are simply treadmills, raising more money to apply it to the not very important business of raising more money.

The finance industry has deep ties to the world of philanthropy (aka charity industry), as wealthy clients very often engage in major “gifting.” Foundations and donations are a major part of tax and estate planning.

As the series makes clear, intelligent philanthropy is much harder than it looks. I always advise that before writing a check, you do your homework. Start with GiveWell and Charity Navigator (also check out Evaluating the Charity Evaluators). Focus on what actually helps people, rather than poorly run, self-interested shops that are borderline scams. (Also, check your ego and avoid trying to have a building with your name on the side of it).

And for heaven’s sake, stop giving money to outfits that pocket 90% of the donations, leaving little or no aid for its intended purpose.

 

 

AWC

 

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Click to enlarge
Map
Source: Tampa Bay Times

Category: Consumer Spending, Investing, Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

7 Responses to “America’s Worst Charities”

  1. BennyProfane says:

    OK, sitting here on a soon to be rainy day, and you start my day with this. Just awful. But, hey, at least it makes members of Congress look almost like responsible citizens, relatively speaking.

    Yes, my vote for a Pulitzer.

  2. Petey Wheatstraw says:

    “Instead, the worst charities are simply treadmills, raising more money to apply it to the not very important business of raising more money.”
    ________________

    had a client, years ago, who spoke of a neighbor who lived in a gated estate in Great Falls, VA (very wealthy area), who made millions bilking people with false, but technically compliant, charities.

    It’s not just “raising more money.” As with banking, and predatory corporate raiders, it’s how much you can divert, via “management” fees, that really counts.

  3. cowboyinthejungle says:

    Your recommendations on where to start in charity evaluation are good, Mr. Ritholtz. Might I also recommend giving locally on a regular basis. People tend to jump into action when there is a disaster or a headline tragedy, but local food banks, animal shelters, etc. need continuous support, too. You can check out the legitimacy of local organizations more easily, and you could donate your time, in addition to your money, to feel more involved.

  4. krice2001 says:

    Caveat Emptor…

  5. martin66 says:

    BR – thanks for this link. I used to do a lot of work in the 501(c)3 space and found that the people and organizations I ran into are truly what we used to call “mission” driven. That said, there were others. Hats off to the Tampa Bay Times and CIR – a Pulitzer indeed for helping to clean up what is clearly a sub sub-culture that deals in swindling the public.

    I have long directed clients to Guidestar and other NPO rating agencies. A principal rating metric of these organizations is % of assets spent on overhead and fundraising, as in lower is better. This seems intuitive enough. But then I listened in to Dan Pallotta’s (AIDS ride) TED talk http://www.ted.com/talks/dan_pallotta_the_way_we_think_about_charity_is_dead_wrong.html for a quite contrarian pov on dollars spent on fundraising. He makes a very good point about how to judge success that is quite opposite to this simple metric. Not that this would not exonerate the ghastly record of the Reynolds family and other fraudsters.

    Krice – more like Caveat Donator…

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  7. [...] of their proceeds to marketers. There are ways to avoid having your good intentions go for naught. Read this review of a recent expose on America’s worst charities, and then take advantage of the links that [...]