Some fundraisers pay >90% of the funds to themselves | Hacker News Reader

Some fundraisers pay >90% of the funds to themselves

propublica.org

134 pointshilux53 comments

Many years ago my sister had a job going door to door asking for donations for environmental causes. I was shocked to discover that the people doing the canvassing immediately pocketed half of the donations as they walked away from the door. And that was only the percentage taken by the people on the front line!

I met a girl who was selling subscriptions for save the children once. Ended up meeting up with her later and asked her about the job. If I had signed up for the thing, paying about $20 a month, she would pocket the first three months. Not sure what her employer would take after that, but knowing they were flying these people around, paying for hotels year round, and probably taking a decent profit on top, I'm guessing I'd be paying for close to a year before any hungry African children would see any money.

They also frame it like you're paying for a specific kid, telling you their story and showing pictures etc, but it's the same picture and story they show everyone. Total scam.

"charity spent millions to raise thousands" is a very usual way of tax evasion. The charity owner has parties with friends and family as guests. This is taxes as "charitable work".

Can this be improved? Yes, this was going to be improved but the politicians were invited to a fundraiser where they got good food and some freebies. And then it stopped. Or something like that...

It doesn't even need malice or selfishness, this kind of thing can also be lack of skill.

A lot of for-profit businesses also take a lot of investments and fail to make much money.

I did a sponsored walk as a kid, I don't think I even raised enough to cover the cost of the petrol to get to the place it was at.

And I hear hospitals have to ask people to not do sponsored skydives to raise money for them, owing to the mean amount raised being lower than the mean cost of the healthcare they need to provide due to skydiving accidents.

But why would hospitals have to cover the cost of skydiving accidents if they didn't even organize the fundraiser?

(side note: Living in Europe, I never heard of skydiving as a popular way to do fundraisers – interesting!)

I forget the region, but by way of example:

My understanding is that in the UK, the NHS is underfunded by taxes and therefore the hospitals do accept charitable support, but also very few people have private insurance on top of the HNS and the NHS hospitals will treat you no matter the cause.

At these scales, the difference between intentional fraud vs. incompetence or negligence is meaningless. Millions of dollars purportedly for charity are being laundered tax-free and enriching someone else.

Susan G Koman is infamous for this. So many people assume money raised is for cancer research, when it's actually meant for awareness. Yes yes, we're well aware that breast cancer exists. Let's cure it with the money instead.

That is infuriating!

It also seems to not be true: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1508105/

I don’t see how that (which is written by the Susan Komen foundation) is a viable source for disagreeing with OP. It also clearly says they use the funds for shaping public policy (in addition to grants)

The comment I'm replying to strongly implies that Susan G Komen funds are NOT used for research.

According to LOTS of links hosted on many credible sites, that is false.

E.g. "Yes yes, we're well aware that breast cancer exists. Let's cure it with the money instead" is negative snark and appears to be completely unjustified.

While this is also true, the article is more about the direct scam that is fundraising companies. These are in principle separate of the charity, basically running a call center and collecting the funds, and that company pockets 90% of the funds people think they're donating to the charity. Of course the 'charity' is aware of this and is complicit, either because they have no other means of fundraising, or (as seems to be the case in this article) the charity is also a scam, basically just having a good name to plug into the script.

Point is, it's more than just writing off parties and entertainment or high salaries, it's directly taking cash in pocket.

I worked with about a dozen or so for a few years and from what I saw they are nothing but one layer of horror built upon another. The incentives are so misaligned that the distinction between "scam" and "incompetence" is virtually meaningless. There is absolutely zero sense of financial reality or proportion present anywhere. If your organization spends $500,000 to rescue one dog but gets a lot of media coverage and banks a ton of photos and video to use in future fundraising efforts, this is a win. If next year you spend $10 million on marketing and development events and are able to raise $10,600,0000 for your efforts, that's also a win.

One especially crazy example of this thinking is the constant internal fundraising efforts. Most of the organizations I worked with were constantly doing internal fundraising, e.g. collecting donation from the same employees they were paying. These efforts would consume absolutely enormous amounts of on the clock employee time on frankly quite childish activities (think accountants doing arts and crafts with markers and construction paper) to raise a pittance in donations from their own employees. Most of the organizations did this once per month. In some cases this consumed an entire workday for a large proportion of employees for an average donation of $5-$15 dollars.

That's the plot of some recent, just 'so-so' action movie.

https://en.wikipedia.org/wiki/The_Beekeeper_(2024_film)

You'll get to see these call centers being blown up, and some scammers beaten or killed by the main protagonist. Also government/political conspiracy, because the main villain is the son of Mrs. President. And of course the secret service protecting her and family at all costs against revenge.

Maybe also elements of persiflage of current tech-guruism.

Many wealthy people that I know in the non-profit space vote for gridlock in Congress.

I’m talking otherwise Democrat northeasterners aiming to send a Republican to the Senate or vice versa. Nothing gets passed on this topic as long as the filibuster cannot be met.

It’s interesting to me. I can see benefitting from the status quo as well compared to some bills I’ve seen.

Only donate to smaller non-profits, get to know them first, find out if the administrators take any income from the non-profit, then make up your mind to donate or not.

For example, one charity I like [0] runs a school and the administrators don't take any income from it.

[0] https://www.dominino.de/spenden-helfen

Smaller non-profits are _way_ more likely to poorly use your funds, especially if they fundraise. Use charity navigator or other reputable organizations to see if a charity you want to support uses your funds well or not.

Some non-profits only pay salaries of employees, but spend the vast majority of their time and money on their fundraising events, which are just ways for rich people to throw parties for free. In that case, they'd still pass your test.

People who work at non-profits deserve to be paid a similar salary to what they'd be paid in the private sector. The important part is that a non-profit should be using the majority of their funds on their mission (and that may require the majority of the funds going to the workers, depending on the mission).

There are lots of apps to plan and track one's investments. Maybe there should be an app to track one's donations too.

If I could see a history of what was the ROI (in terms of money spent on actual programs) of my monthly donations, and also easily reallocate those donations to other charities, I'd certainly check up on that app every once in a while.

I believe this is the idea of effective altruism.

I believe part of it is about measuring quantitative indicators of program quality, but they also seem to go for the more fraught project of trying to put a dollar figure on the value of the outcomes. Or a “quality-adjusted life years” figure, or whatever have you.

It feels like that frame of mind selects for a very specific sense of success.

I don't know if this is any help but it looked interesting:

https://www.charitywatch.org/top-rated-charities

I've used Charity navigator for years. They have alway been a very good source of high-quality charities to ensure the bulk of the donation goes to the actual cause. It even has audit information breaking down the distribution of funds. Givewell is another recommendation.

https://www.charitynavigator.org

https://www.givewell.org/

+1 Management vs advertising vs program spending can drastically vary from charity to charity. And there are some bad practices even by very well-known names (see: ad spend).

Another resource I’ve found super helpful is The Life You Can Save by Peter Singer. Very interesting read/listen and gets you thinking about the most impactful ways to give. Free to download or listen as well: https://www.thelifeyoucansave.org/the-book

Although a lot of the comments so far refer to charitable fundraising, this story is about political fundraising, often confusingly similar to charities; e.g., the American Breast Cancer Coalition. The kicker is that some of the parties involved have previously been "banned from all charitable fundraising for life."

Go to Northern VA. There are a lot of mansions owned by non profit higher ups.

I work at a non-profit (although not one that fundraises and solicits donations), and while I do earn less than could make in the private sector, I still fully expect to be paid at a level commensurate with my skill and experience. If you want to attract good people you have to pay at least close to what they could make working somewhere else.

Yup. There's definitely some neighborhoods like Great Falls where it seems like everyone is either a corporate exec, a federal politician, or a pro athlete.

Charities can hide their percentages when they self-deal with people on their board. It's highly unethical.

Wreaths Across America is notorious for this. All the money they raise goes to the wreath making company that the board members own. When they put out RFPs, as per legal requirements, Worcester Wreath Company is always sole-source provider. https://popular.info/p/the-truth-about-wreaths-across-americ...

Worcester Wreath Company lost its contract with LL Bean due to their bad busines practices. Wreaths Across America was created by Morril Worcester as a way to sell more wreaths. It's a grift all the way down.

https://files.mainelaw.maine.edu/library/SuperiorCourt/decis...

One of the many satisfying things about local volunteering is that 100% of your investment goes to the cause, and you get a first person view on what tools or materials the team/club/class could use if you're thinking of donating more than just your time.

For an absolute wild docuseries about one of these related scams, check out Telemarketers on HBO.

I have prepped some tax returns for non profits (990) in the usa, and all are publicly available on guidestar.org and you can see the amount paid to the board and key employees like ceo. It would be cool if the information was easier to compare.

If you want to see a whole documentary that really outlines and emphasizes this point, the ‘Telemarketers’ documentary follows a few workers for a police lodge hotline that also keeps 90% of the revenue for themselves.

ProPublica 527 Explorer Database: https://projects.propublica.org/527-explorer/

yeah, this is been one of the most difficult parts about becoming an adult was realizing that so many nonprofits are basically just self-serving jobs programs.

especially when the CEO can be paid "market rate."

I stopped donating to a very well known charity organization when I found that 85% of the annual costs were administrative, 10% we're property costs, and only 5% went to actual programs. This may be just the way the local chapter is set up, but it's fucking greasy.

Why do people post comments like this and not name the offenders?

Do you really need an answer or are you as guilty as they are?

It's a reasonable request. Readers who see the charity to be named named may also donate to them, and seeing such a claim would make readers think twice and perhaps make their donations elsewhere.

There is almost a zero percent chance of other people here being from the small town I'm from.

Naming them doesn't do any good, because the national charity does really good work in a lot of places.

It’s not a request, it’s a rhetorical question with the same intent as the comment it’s responding to: signaling outrage.

Both are self-serving and harmful to the actual cause. Despite being on the same side of the issue, neither actually affect any change. Even worse, they both probably feel like they’ve done something to help by posting a comment on a social media site and are now less likely to take any real action

To be fair, without evidence such name-calling would not be helpful. Not talking about a specific local chapter of a single charity and instead focusing on the problem in general seems to be more helpful in this context.

Exactly. And the national charity for this example does really good work in a lot of places. Like I said, I think it's just how the local chapter is organized.

(1) Because shaming a small-scale offender misses the point. And to avoid the perception of libel.

(2) Now that you know this type of fraud is a possibility, nothing stops YOU from checking Charity Navigator before donating.

There are also those nonprofits that are run by rich people that are basically a mechanism to reduce taxes on activities they would already do

The tax code is a reading comprehension game.

The 400 section specifies tax deferral programs (ie. 401(k), there are other subsections)

The 500 section specifies tax exempt programs (ie. 501(c)(3), there are other subsections)

The offices within the IRS dedicated to those sections help you. As opposed to the adversarial relationship that low income tax credit people have. My point is that its not an accident or attempt to pull a fast one on the tax authority. The government is telling you what to do.

And to give prestigious jobs to family members.

I worked in the space for a couple of years and I will never give a penny to any of them after what I saw. The organizations are a mess of petty squabbling between people who could never get real jobs, there's a complete misalignment of incentives between the people giving, vs the people doing, vs the recipients that leads to all sorts of absurd inefficiencies with zero pressure to fix them. Fundraising ("development") is where the real horrors are. If a charity can raise $1000 at a cost of $990 that's a free $10 for them, so most do not care at all except to the extent that it hypothetically exhausts the potential pool of donor dollars.

Yes, it’s called running a “charity”.

Unfortunately, prosecutors rarely go after nonprofits for fraud. This has led most grifters into the nonprofit sector.

Yeah, pretty much better off for society offering low-interest loans to people trying to start businesses. That can produce value and jobs in products that other people value. A rising tides raise all boats, so to speak.

Wait till they find out about the Human Fund

I was skeptical of the Human Fund until I learned Vandelay Industries exclusively uses them for its charitable outreach.

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