BLOG: Some Thoughts About Charitable Organizations

So this is my first blog and with all the consternation about Susan B. Komen defunding then refunding Planned Parenthood to perform breast cancer screenings I got interested in the financials of charities in general. It seems like every 10 years or so we have a major scandal regarding charities. 

The first one that I remember clearly was United Way in the early 90's when the CEO  of the charity ran up several hundred thousand dollars of expenses on his teenage girlfriend. Then there was the Red Cross scandals of the early 2000’s when they replaced leadership every year as problems with preparedness showed up after 9/11 and Katrina as well as the mis-direction of donations.

So we are left with an interesting conundrum of whether to donate to a charity and what one’s to donate to. Do charities exist just to enrich their founders and leaders, do they serve the segment that they say they will, do they actually serve folks or just channel money?

There are a lot of online resources you can use to check out a charity but the best one is their audited financial statement. You can see from this how much money is being used for stated purposes and how much is going for salaries, G&A, and fundraising.  I looked at a couple of charities that have been the headlines lately and compared them in terms of assets, income, distributions, and salaries, G&A, and expenses. Make your own judgments.

Catholic Charities

Net Assets                                          $46 M

Revenue                                              $ 7.6M

Grants & Charitable expenses    $ 5.6 M

G&A and expenses                         $ 2.4 M

Planned Parenthood

Net Assets                                          $1038 M

Revenue                                              $ 1079 M

Grants & Charitable expenses    $  789 M

G&A and expenses                         $  162  M

Susan B. Komen

Net Assets                                          $ 193 M

Revenue                                              $ 420 M

Grants & Charitable expenses    $ 334 M

G&A and expenses                         $  75  M

American Red Cross

Net Assets                                          $ 2560 M

Revenue                                              $ 3439 M

Grants & Charitable expenses    $ 3332 M

G&A and expenses                         $  362 M

So its interesting to compare the organizations. SPK and CC are both flow thru charities, i.e. they take in money and distribute it to other charitable organizations but provide few if any services themselves. PP operates about 800 clinics and is the largest reproductive health provider in the US. ARC both assists in emergency preparedness and in relief after an emergency occurs.  Despite the differences in operation CC and SBK have charity to G&A ratios of 2.3:1 and 4.4:1 and PP and ARC have ratios of 4.8:1 and 9.2:1. I guess I would expect organizations that exist to collect and disburse money to have lower expenses than those that provide services but just the opposite seems to be the case.

This research was interesting to me and convinces me that I will be more careful with my charitable dollars in the future to insure the organization is putting money towards the services I want to support rather than going to support administrators. I guess the other thing I learned is flow thru charities are probably a poorer choice if you want your dollars to go to the cause you endorse.