Charity Watchdog Grades Fund-Raising Philanthropy Guide Rates Charities on Need, Performance

By Laurel Shaper Walters, writer of The Christian Science Monitor | The Christian Science Monitor, December 20, 1994 | Go to article overview

Charity Watchdog Grades Fund-Raising Philanthropy Guide Rates Charities on Need, Performance


Laurel Shaper Walters, writer of The Christian Science Monitor, The Christian Science Monitor


THE holidays herald the season for charitable giving. Requests from every direction flood mailboxes, and the Salvation Army rings in donations at busy street corners and mall entrances.

Americans contributed $126 billion last year to the nation's 1 million nonprofit organizations, according to the American Association of Fund-Raising Counsel. But these generous givers often know little about how their money is used once the check is cashed.

"Donor beware," warns Daniel Borochoff, president of the American Institute of Philanthropy (AIP), which analyzes charity finances. "The biggest advertisers get the most money, but they may not be the groups that are doing the best work," he says during an interview at his spare office in the Central West End of St. Louis. "People need to keep in mind that these organizations may spend your money well, they may waste it, or they may pocket it."

Recent scandals involving such large charities as the United Way and the NAACP have raised public awareness on the topic. A 1993 Gallup poll found that 50 percent of those surveyed viewed charities as less trustworthy today than a decade ago. But nonprofit organizations remain largely free from scrutiny, Mr. Borochoff says.

To help donors make informed decisions, AIP publishes a quarterly Charity Rating Guide. It analyzes about 300 charities in 37 categories ranging from "Abortion & Family Planning" to the "Environment," "Literacy," and "Youth Development."

The guide gives each charity a letter grade and answers three basic questions about its financial practices:

* What percent of donations are spent on charitable programs? At least 60 percent of total expenses should be spent for charitable purposes, according to AIP standards. The remainder is used for fund-raising and general administration.

"What's really gotten out of hand is charities calling their solicitations a public-education program," Borochoff says. "They're certainly free to do that. But what the donor has to decide is: Do I want to fund this?" If you would prefer your dollars went directly to the cause rather than toward fund-raising, look for charities with high percentages in this category.

* How much is spent to raise each $100 donation? In this category, the AIP standard is $35 or less.

More and more professional fund-raisers take a share of each donation. "Charities are hard up for money, and there's a lot of competition out there," Borochoff says. …

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