You're a security professional, you have a very highly developed and sophisticated ability to discern scams from non-scams. Normal people are not like this, scam charities are actually a big problem that they have to watch out for. That is just the sad reality.
A foundation that I used to collect for turned out to be a scam. Plenty of others that I'm aware of did marginal good still managed to make off with the majority of the take.
The ratio of funds disbursed to goal:funds taken to run the charity is the key indicator. Once you start to look at charities that way a disproportionally large number of them come up wanting. I've lost my appetite for charity long ago and I now use my funds in a different way, I help people directly where and whenever I can without any middle men/women.
Watsi seems to be a very rare thing, I wished that weren't the case but it certainly seems like that to me. Feel free to disagree. Props to this journalist for making doubly sure that he's not going to regret making a recommendation. Like I regret going door to door taking money from not-so-wealthy people to see it all go away to what turned out to be thieves in suits.
Watsi is extremely good in this respect, they're very transparent about what they do with the money. Most other charities do not cross that threshold for me, I'm happy to hear that other charities do cross that threshold for you.
Is a good place to start when considering giving to a charity. And if it isn't listed there then you're probably better off giving it a miss rather than your hard earned money.
Most charities do all they can to avoid revealing the percentage of their income that goes to the charity's goals. They are under no legal obligation to do this, and there are any number of ways to make administrative costs look like charitable spending.
A typical -- typical -- case history is that of Greg Mortenson, of "Three Cups of Tea" fame, who made off with a million dollars of foundation money for his personal expenses, all justified of course as legitimate expenditures related to the foundation. The only reason this story went south is because some disgruntled insiders blew the whistle on him, and he has been ordered to pay the money back ... eventually.
Story told in detail here: http://en.wikipedia.org/wiki/Three_Cups_of_Deceit
Bona fide administrative costs are part of the money that goes to the charity's goals.
> A typical -- typical -- case history is that of Greg Mortenson, of "Three Cups of Tea" fame, who made off with a million dollars of foundation money for his personal expenses, all justified of course as legitimate expenditures related to the foundation
Repeating and italicizing the claim that the case is typical isn't actually justifying the claim; in any case, there's a pretty big difference between the allegations against Mortenson in Three Cups of Deceit (or the findings of the Montana investigation into Mortenson's use of CAI funds) and bona fide administrative expenses.
Abuse of funds (whether administrative or not) is an issue orthogonal to the share of funds used for administrative purposes.
Yes, but that requires a definition of "bona fide", something easier said than done. Yo can run a charity with 50 staff, or five staff and terrific computer software, as just one example where there's no wrongdoing, but a big difference in outcome. The problem is that many charities don't think of themselves as businesses with a bottom line.
I speak as a philanthropist with many decades of experience.
> ... there's a pretty big difference between the allegations against Mortenson in Three Cups of Deceit (or the findings of the Montana investigation into Mortenson's use of CAI funds) and bona fide administrative expenses.
You clearly missed the point of the "Three Cups" story. It only came to light because some insiders weren't on board. That problem is easily solved -- feather each nest equally.
> Abuse of funds (whether administrative or not) is an issue orthogonal to the share of funds used for administrative purposes.
That's quite false. In many cases of charity abuse, administrative costs is the exploitable and exploited defect, as it certainly was in the "Three Cups" story. Another is the cost of fundraising, which in some cases undermines the entire charity by paying too much in fundraising costs for each donated dollar.
Examples:
http://www.forbes.com/sites/williampbarrett/2012/02/22/chari...
I don't agree that that is "the" point of the story, but I didn't miss that fact. So what? Regular independent audits which are published (or at least available to funders) are a means of monitoring to detect and avoid abuse -- whether in administrative expenses or elsewhere -- and also, themselves, an administrative expense. Transparency is the antidote for abuse, but transparency requires spending money tracking things and making it available (and having someone periodically reviewing the practices of those doing the day to day tracking.)
Minimizing administrative expenses is not a means of avoiding abuse.
> In many cases of charity abuse, administrative costs is the exploitable and exploited defect
And in many cases, non-administrative costs nominally serving the charities direct mission that just happen to be used to purchase goods from firms owned by decision-makers in the charity are the exploited defect.
Share of costs that go to administrative purposes is orthogonal to abuse. Whether funds are (administrative or otherwise) are spent in a way that actually serves to advance the goals of the charity rather than the other personal interests of the charity's decision makers is the key issue, and it is neither the case that abuse is specific to administrative costs, or that increasing the share of resources devoted to administrative functions cannot improve the ability of the organization, on the same total expenditures, to advance its goals.
Share of expenditures on administrative costs is a simple metric, but it's not really a good one for either measuring the effectiveness of a charity or the risk of abuse (which aren't the same thing, although abuse is linked to lack of effectiveness.)
> Another is the cost of fundraising, which in some cases undermines the entire charity by paying too much in fundraising costs for each donated dollar.
Fundraising is actually the most common problem; its very rare for a charity with serious abuse in the way it uses other funds (administrative or non-administrative) to not also be spending virtually all of its money on fundraising, often spending it on fundraising firms that have an incestuous relationship with the charities own decision-making (to the extent that probably the single most common charity scam is charities that are essentially set up by fundraising companies with which they immediately forge exclusive contracts and serve basically as a means for funnelling donations into fundraising appeals to raise more donations to feed into more fundraising appeals.)
I already pointed out that the "Three Cups" story falsifies this claim. And that story is by no means uncommon. People of limited commitment to a charitable cause find it very easy to justify personal expenditures as "administrative" costs. Again, this is based on decades of experience inside and outside charities (both as a funding source and as a volunteer).
I can't find anything to object to in your final paragraph -- it's well worth reading.
The story of an incident of abuse of administrative costs does not falsify the claim that the share of administrative costs is orthogonal to the level of overall abuse; that incident doesn't demonstrate a positive relation between administrative costs and abuse any more than the many, many stories of self-dealing and other abuse by charity decision-makers in the non-administrative costs of non-profits demonstrates a positive relation between non-administrative costs and abuse.
Lack of accountability measures (which themselves tend to be things that actually involve administrative expenditures) are probably the single biggest risk factor for abuse, since its the one thing that is directly related to being able to get away with abuse.
Greg Mortenson abused his foundation to the tune of over a million dollars by withdrawing administrative funds for his personal use. That demonstrates a positive relationship between administrative costs and abuse.
Have a nice day.
No, it doesn't. A correlation between two variables can't be demonstrated by a single data point.
Students go around asking for thousands of dollars to send local kids to go "build a {house, school, well} in {third-world country}". If you look at the budget breakdowns, something like 80% of it goes to the flights getting the students down to said country in the first place.
Let's also be clear that in this case, with Watsi, there's no cannibalization to refer to. Watsi is in many cases working with Partners in Health, which is pretty close to being an unimpeachable charity.