Often times, when a person is picking a charity to donate to or volunteer for, they look at only a few things. What the charity does, and where it does it. If they like pets, maybe they volunteer or donate to the ASPCA. Or, if they want to keep their efforts a little closer to home, they volunteer or donate to their local Humane Society or shelter. One of the things that they very infrequently look at is how much of the money they donate is really going to the cause.
Main Street had a nice list a few days back about the charities with the highest administrative costs. Top of the list is a charity by the name of the American Tract Society. 68% of the donations that they receive go towards paying administrative costs. Or, 32% goes towards the actual charitable work that they do. To create their list, they used a tool called the Charity Navigator. They compile the actual numbers via the IRS filings and put together a sort of watch dog group for charity costs.
One of the things that I noticed is that many of the charities on Main Streets list are smaller charities, which could account for some of the costs. A smaller charity doesn’t gather the bigger donations from as wide of a base as some of the larger charities and so has a higher administrative cost percentage. Even so, the next time you decide to give to a charity, it might bear taking a look at the tool at Charity Navigator and see if that charity is a “bad” charity.