"A Guide to Giving"-The Worthiness Formula
Tuesday, February 26, 2008SUSIE GHARIB: Today is national corporate philanthropy day. It's a chance to take stock of giving from both the public and private sectors. Charitable donations total nearly $300 billion a year in the U.S. But before you give, how do you figure out if a charity deserves your time or money? As we continue our series "A Guide to Giving," Stephanie Dhue looks at how to determine if a charity is effective and worthy of your contribution.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Here at So Others Might Eat the focus is on helping the homeless. The DC-based non- profit, also known as SOME, serves 850 meals to the homeless each day. Last year, it also supplied nearly 17,000 showers and free clothing. And it provided more than 9,000 medical and dental care visits to people who otherwise may have gone without. It is recognized as a well-run charity because of its low fundraising and administrative expenses. SOME's President Father John Adams says it's important for donors to trust the organization.
FATHER JOHN ADAMS, PRESIDENT, SO OTHERS MIGHT EAT: SOME has a very core value of stewardship and try to be very transparent to let people know where their money is being spent and what the needs are in Washington of the homeless community and the low income community and keeping people well-informed.
DHUE: SOME's many volunteers also help hold the organization accountable. People who give not just money, but also time and energy, can see first hand the results of their contributions. So Others Might Eat stands out in a time when some high-profile non-profits are struggling with accountability. Donors have been turned off by mis-appropriated funds at charities including the American Red Cross and lavish personal spending by non-profit executives. Senator Charles Grassley is pressing for more accountability from tax-exempt organizations. He helped pass legislation to beef up oversight by the IRS. But those measures stopped short of more sweeping reforms.
SEN. CHARLES GRASSLEY, CHAIRMAN, SENATE FINANCE COMMITTEE: The reason why that we haven't had to pass all that legislation is because our investigations have pointed out so much wrong-doing that a lot of these organizations have done self-correcting.
DHUE: Grassley has also called on the non-profit community to report what he says are high salaries, generous allowances and loans to executives.
GRASSLEY: I think we have awakened boards of trustees, boards of directors of non-profits, foundations and endowments, etcetera, that they have assumed more responsibility.
DHUE: Donors are also keying in on responsibility, asking questions about where their money is going. The web has become a valuable place for finding answers. On the GuideStar website you can find non-profit's IRS Form 990. It's the equivalent of an income tax return for non-profits listing revenue, expenses and other financial information. Another organization, Charity Navigator evaluates thousands of non-profit organizations. It rates them based on those 990 filings. Give.org is another way to check a non-profit. It's operated by the Better Business Bureau's wise giving alliance. It too rates charities on their ability to meet basic accountability standards. But Doug White, author of "Charity on Trial," says there's a risk of relying too heavily on those ratings. For example, a public television station once got a zero rating from Charity Navigator. The station had high fundraising and administrative expenses as it prepared to upgrade its older facility to newer, more expensive, digital HDTV equipment.
DOUG WHITE, AUTHOR, CHARITY ON TRIAL: I found a perfectly good community-oriented public television station served its people very well and who got a very bad rating and so that number doesn't tell the whole story and it usually doesn't.
DHUE: GuideStar CEO Bob Ottenhoff says there are important factors when deciding if a charity deserves your contribution. Its books should be open. Its mission should be clear. And its results should be measurable.
BOB OTTENHOFF, CEO, GUIDESTAR: There are some donors only interested in seeing that an organization is efficient. They are looking at ratios, but I think a more meaningful request is to say, are you being effective? Are you taking the money we give you and meeting your mission?
DHUE: More than 65,000 new non-profits were created in 2006. With that growing competition, the ones that can demonstrate they are making a difference will be the most likely to succeed. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.
