CNN recently featured an expose on a charitable institution in the US showing that a mere 10 per cent of the $50M donations went to the actual recipients and the rest went to marketing and admin costs. With the holiday season just around the corner, it is easier for us to dig deeper into our pockets and help those who are in need of assistance like the victims of Hurricane Sandy or the Christmas wish list of many disadvantaged children or families.
The Better Business Bureau, in a Toronto Star article, warns about a deluge of pitches for charitable donations for the recent hurricane and some of them are fraudulent. Never agree to donate by phone until you personally check out the charity and instead of responding to scam emails claiming to provide a link to a charity's relief page, go to the website yourself.
In a Guide to Giving brochure, Imagine Canada gives tips on how to handle solicitations:
- If someone asking for a donation makes you feel uncomfortable, pressures you to give or gives promises more than realistic (such as a tax receipt for more than you give), just say no.
- Most charities must fundraise in order to operate, but they try to keep costs low. Reviewing a three-to-five year average of fundraising costs can give you a better picture than a one year report.
- The CRA may review a charity's costs if it uses more than 35 per cent of donations to raise money. If the charity's costs exceed 70 per cent, the CRA will ask the charity for an explanation.
- Ask if a charity has signed on to the Association of Fundraising Professionals' code of ethics, which doesn't allow commission-based payments to fundraisers.
- Don't focus too much on the administrative costs. Studies have found that lower administrative costs can limit the effectiveness of charities.
- Focus more on impact that a charity is making in Canada and around the world.