[...] Charities and their Management Expense Ratios (MER) [...]

[...] called the Charity Navigator which does a good job of providing reviews on U.S. based charities. A brief review of some Canadian charties indicates that MERs run between [...]

[...] a charity that aligns with my values and provides top value for those they are trying to help (ie. keeps their admin expenses low).  Within this search, for you business owners out there, I came to the question of whether [...]

[...] me, this piece of information is vital in determining where my money will go, kinda like registered charities and their MER's. [...]

[...] Below is a poll of some popular Canadian charities, please take a moment and vote for your favorite.  I've also calculated some of the management expense ratios of the charities listed below in "Charities and their Management Expense Ratios". [...]

[...] Money Finance has hosted this weeks Carnival of Personal Finance.  My article on Charities and their Management Expense Ratios was [...]

Expense ratios are a crude measure of a nonprofits effectiveness or efficiency. Some of your local, small charities may have to spend more on “overhead” and fundraising while they grow, get their name known and expand. While few organizations are as “awarded” at Doctors w/out Borders (I give to them every month), I would recommend you use industry awards (NYTimes, Fast Company, etc), and gifts from big foundations (Gates, Robin Hood) as an indicator that the group is sound. Foundation staff turn an organization inside-out to ensure they do good work. Awards like the NYTimes have a committee of experts in philanthropy that screen and select winners.

[...] posted at Free Money Finance. Besides the host’s picks for Editor’s Choice, I enjoyed Charities and Their Management Expense Ratios, Pay Yourself First, and Not Just Financially, and I Could Use Someone Else’s Credit Card to [...]

Carnival of Personal Finance…

Welcome to this week’s edition of the Carnival of Personal Finance. For those of you looking for/expecting the book giveaway I’ve been doing all month, please check back at the end of the day. For those of you who do…

There are watchdogs for US charities that calculate overhead ratios (i.e. CharityNavigator.com) but I don’t see any for Canadian ones.

I’ve heard horror stories of some multinational charities who spend their money outfitting their staff with $70,000 Land Rovers in order to combat famine in Africa. Or those who spend 60% of their budget on a splashy TV commercial.

One charity that I like is Room To Read (MER: 12%) – it builds schools and libraries in developing countries in the way Gates VP desires – the charity brings the supplies and expertise, but expect in-kind support from the village. They do not assist those who do not put some skin in the game. Instead of Land Rovers they hire local drivers and transport, whether it be car, motorcycle or yak.

The founder is an ex-Microsoft executive, so they are very keen on accountability – they publish an annual report and audited financials.

P.S. According to the BBB, charities should keep their overhead ratio at 35% or lower. So all three of FT’s charities listed above are running quite efficiently indeed.

Despite first appearances I actually really love donation and volunteering, I just haven’t found the right targets for my time :(

I haven’t been really big on donations and it’s part MER, part philosophical. I used to work for the YMCA (which is basically a charitable organization and pays that way), but I continued to work there even after getting a pay raise elsewhere b/c it had the greatest people to work with.

From an MER perspective, big charity organizations have all kinds of overhead issues and donating money to an group means that you’re effectively empowering that group to take decisions you may not agree with. If I donate $500 to the Cancer Society, where does that money go? If I have a deep-seeded belief that future research money should go into retro-virals (say b/c I don’t “believe in pills”), the Cancer Society may not share that belief, heck they may spend most of that money researching new pills and chemotherapy mixes, which is exactly what I don’t want them to do.

Take a look at the Red Cross during 9/11 (and other crises on a smaller scale). Millions of dollars were donated to the Red Cross as part of a knee-jerk reaction but nobody knew where it was going or what it was for, they just donated.

And this is where we venture into the philosophical.

Why am I donating to the Cancer Society or the MS Society or Breast Cancer or any of these Hospital Research Foundations?

“Curing” cancer is undoubtedly a noble goal, but why do they need my donations? Don’t they already get government grants, aren’t we already paying for these in some way? And if we’re not when do we switch it over? Why do we authorize big drug companies to do Cancer Research when they have conflicting interests with the public good? Drug companies spend 15% on R&D and 85% on Marketing & Advertising and they have no interest in curing people b/c it’s not good for their investors. Cured people do not bring in as much money as people who “remain sick” while they’re not using your drugs. Now any publicly traded company is required by law to be acting in their investors’ best interests. So we’re actually requiring drug companies to behave in a manner that isn’t good for public health AND we’re applying free market concepts to a system that isn’t ruled by supply and demand (see Hospital Bills in the US).

When I donate money to a “healthcare”-related field, I’m basically just throwing more of my money into the already bloated and poorly-designed healthcare field. So obviously, I have some philosphical reservations about making donations (despite losing 2 family members to cancer in the last 2 years).

By the same measure we get groups like Make Poverty History (no, you’re not getting a link), that hire on tons of big stars but have this horrible, unsustainable plan. I want to make this clear, I spent one hour on their site, a site dedicated to “Making Poverty History” and I did not find one definition of Poverty, not one. Most systems use some type of sliding scale: i.e.: everyone making less than X is poor, but that makes it pretty tough to eliminate poverty b/c it’s a sliding scale! They have a goal that is basically impossible (like the War on Drugs), so they don’t get any of my money!

Same goes for most of the “help the poor” type of groups. Given the unfit definitions of “poor”, giving money to these organizations is pretty sketchy. I mean, we’re already paying money into the welfare (EIA) system and numerous government subsidy programs at the provincial and federal level. So we’re already donating tons of money to help those less fortunate, shouldn’t we be more scrutinizing of the programs we’re already paying for before we offer more money?

Truth is I haven’t donated money in a few years, b/c I just can’t find people I’d like to give to. My fiancé and I have discussed Kiva a couple of times, and that’s probably my only good lead, b/c you’re not actually giving, you’re helping people help themselves.

At the end of the day, I’ve come to a pretty simple personal conclusion: I don’t believe in giving money (with maybe Kiva as the exception). I believe in giving time and stuff, especially for those who are less fortunate. Money is corruptible (very liquid) and often hard to trace. Money is not the type of thing we want to give those who are less fortunate. We want to give a means of survival to those who are less fortunate so that they can earn the money to support themselves.

I don’t want to send a million dollars to Kenya to build a new school. I want to send a boatload of building supplies and a pair of contractors to help the Kenyans build their own school. Heck we could even earmark the money to pay the Kenyans. I don’t want to give money to a country that just lost 100,000 people in a landslide, they don’t need money. They need a flotilla of medical supplies, foodstuffs, blankets, clothes and building materials and that’s what they should get.

Children’s Hospital and the like have a much easier time raising money than charities such as Canadian Mental Health and Lung Cancer Canada – which generally tend to have a stigma attached to them. It really is unfortunate because there are many great charities out there that have a hard time getting funded.

I keep telling myself I will pick a new charity each year and make regular contributions so that I can spread my money around to many people in need. Yet, month after month, I find my direct donation withdrawal going to UNICEF. I can’t help but think that basic running water has to be the most important gift I can give. Maybe this month I’ll add another charity.

Thanks for the reminder FT. I think this is a very important post. Those of us that can afford to help, in even a small way, should do so. In our quest to financial freedom, knowing we helped others along the way can be very rewarding.