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> Most of the charities people have heard of actually do a lot of good. Most charities do all they can to avoid revealing the percentage of their income that g

• dragonwriter 13y ago
  > 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. 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.
  • lutusp 13y ago
    > Bona fide administrative costs are part of the money that goes to the charity's goals. 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/charities-fudge-their-fundraising-costs-shocking/ http://www.forbes.com/sites/williampbarrett/2012/02/22/chari...
    • dragonwriter 13y ago
      > You clearly missed the point of the "Three Cups" story. It only came to light because some insiders weren't on board. 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.)
      • 13y ago