How much of the money charities raise actually goes toward charitable activities? While there are plenty of charities that do what they’re supposed to -- help people who need it, fund research, etc. -- there are many others that don't.
According to a yearlong investigation by the Tampa Bay Times and the Center for Investigative Reporting, there are about 6,000 charities that hire for-profit corporations to raise money and end up spending far too little on actual charitable activities. The nation’s 50 worst charities, as ranked by the Times and CIR, have paid corporate solicitors nearly $1 billion over 10 years.
A good, highly efficient, charitable organization usually spends about 75 percent of the money it raises on charitable programs and the remaining 25 percent on general administration and fundraising, according to the American Institute of Philanthropy. At the lowest end of the “acceptable” spectrum are charities that spend 60 percent on charitable programs and the remaining 40 percent on general administration and fundraising.
The Kids Wish Network, tied for lowest-rated on the Times and CIR’s list, has paid nearly $110 million to corporate solicitors and another $4.8 million to its founder and his own consulting firms. Only about $3.2 million of the total $127.8 billion raised by the charity has gone toward helping the dying children for whom it supposedly exists.
According to Melissa Schwartz, a crisis management specialist hired by the Kids Wish Network, the charity hired outside companies to raise funds so that its staff could focus on granting wishes, reported the Times.
Second on the list, with more than $80 million paid to corporate solicitors over 10 years, is Cancer Fund of America. CFA founder James T. Reynolds, when asked about his charity’s fundraising expenses, told the Times that he intended to reduce his charity’s high fundraising costs.
No. 3 on the list, with $63.6 million paid to outside fundraisers, was the Children’s Wish Foundation International. Linda Dozoretz, who founded the organization with her late husband in 1985, told the Times that telemarketing has helped the charity find children in need of its help.
Fourth on the list was the American Breast Cancer Foundation, with $59.8 million paid to corporate solicitors. Its founder, Phyllis Wolf, hired a telemarketing company run by her son, Joseph Wolf, to whom the charity paid nearly 75 percent of all the money raised. In June 2010, after negative publicity about the charity’s contract with the telemarketing company, the board forced Phyllis Wolf to resign and terminated the contract with her son, reported the Times. The charity has since changed leadership and is dedicating far more money toward supporting breast cancer patients than before.
The fifth organization on the list is the Firefighters Charitable Foundation, which paid $54.7 million to professional fundraisers. Founder Louis Pelico resigned in 2006 after repeated unsuccessful attempts to reduce fundraising costs. The organization’s current president, Frank Tepedino, took over from Pelico, saying he would bring costs down. Today, the charity spends 90 cents on the dollar in fundraising expenses, according to the Times.
Note: All mentions of the Times in this story refer to the Tampa Bay Times.