Making sense of charitable-donation givers
The phone rings just as we're sitting down to eat. Ours is one of the 54 million households whose number is listed on the federal do-not-call registry. But this dinner interruption is exempt, because it's on behalf of a nonprofit. What's more, the earnest young person on the line is asking me to support a cause I happen to believe in. But do I really want to decide what to contribute now, before my capellini cool? I give the solicitor my standard response: "We don't make pledges over the phone, but we'll consider your organization when we decide about our donations at the end of the year." My answer's quick and courteous, and it's also the truth.
Every December, my husband and I pull out a folder with records of our annual donations for the past several years, as well as requests we've received over the last 12 months. We're not the only people who do this. Last year, fully half of the $184 billion donated by individuals in the U.S. went out between Thanksgiving and December 31, the end of the tax year. At our house, this annual ritual involves roughly assessing the current state of our finances, reviewing our donation priorities, allocating our bucks and writing a bunch of checks -- or, more recently, filling in our credit card number.
We feel pretty good about our little system: It allows us to discuss how we want to spend our shared resources, makes record keeping for tax purposes a lot easier and forces us to think about where our dollars ought to go. Trouble is, for all our analysis and organization, determining the best way to do good turns out to be sort of tricky. The deeper we dig into our contribution criteria, the more perplexing questions come up.
Which causes deserve our support? There's no end of problems in the world, but our budget is limited. Since we can't do everything, how do we choose between feeding the hungry, housing the homeless, healing the sick and helping the oppressed -- not to mention saving the environment? Sure it's important to help the victims of the latest disaster, but what if that leaves us with fewer bucks to give organizations that are always in need? Is it better to meet the immediate needs of people living in poverty, or to go after the policies that promote economic inequities? Supporting policy-effecting activities typically translates into donations we can't deduct -- gifts to the ACLU, for example, or our favorite political candidate. How much do we care about that?
If there's a good way to answer these questions, we haven't found it. Because we're uneasy about engaging in triage, we end up spreading our donations around. That's not the ideal approach, according to some philanthropy pros. Lots of smaller donations are harder for recipients to handle than fewer, larger contributions. And giving to lots of different places also makes it more difficult for donors to keep an eye on those organizations they support.
Which brings us to the next question: Once we've sorted out our priorities, which particular organizations should we support? At last count, The New York Times reports more than 900,000 different charities -- and another 690,000 or so tax-exempt organizations -- are operating in the U.S. How to choose?
My gut says we should begin by taking care of our own. After all, doesn't charity begin at home? You can get arrested for refusing to feed your own child, but whether or not you help care for someone else's kid is entirely up to you. Since we live in Burlington, doesn't it follow that if we want to help alleviate hunger, we should support a local outfit like the Chittenden Emergency Food Shelf?
Not necessarily, my philosophical husband suggests. Does the fact that Melissa's in Montpelier while Mustafa lives in Marrakech make her troubles more troubling than his? Are folks who are lucky enough to live near people with means somehow more deserving? Doesn't degree of desperation trump geographic location?
More critical than the local-versus-global debate, though, is whether a particular organization can be trusted. One obvious worry is fraud: solicitation in the name of charitable organizations that don't actually exist; or, more commonly, on behalf of legitimate charities by private telemarketing firms that pocket all but a small fraction of the proceeds.
Spending too much on non-essentials can be a problem with any organization. We want our bucks to help better the lives of bona fide beneficiaries, not help distribute yet another glossy mailer or finance some CEO's new SUV. We also don't want to piss away our dollars on some group we're not sure will be around next year.
Organizational efficiency and capacity are criteria Charity Navigator uses to evaluate nonprofits. One of several Web-based charity watchdogs [see sidebar], CN maintains data on 2500 organizations. It gives its highest ratings to those that spend less to raise more, devoting the biggest part of their budgets to the programs and services they exist to provide. High marks also go to groups CN deems fiscally sound.
The worst offender on the CN Website: United Children's Fund. The Washington, D.C., organization's stated mission is to support charitable and educational efforts "in connection to improving child safety and health." Last year, UCF reported around $91,000 in revenues. The amount it spent on programs: zero. Which is exactly the number of stars the entity receives on CN's one-to-four scale.
At the other end of the spectrum is the Children's Aid Society, an organization founded 150 years ago in New York City to ensure "the physical and emotional well being of children and families." Ninety-two percent of the charity's $73 million budget goes to programs. If you were looking to help kids, to which organization would you send your check?
Charity Navigator makes it easy to key in a cause and screen out all but the four-star charities in that category. But this approach has its drawbacks. CN's strictly numerical analysis tends to rate poorly nonprofits that are relatively small or new, those that champion controversial causes or target a small class of beneficiaries, like people who suffer from a relatively uncommon disease.
CN's system is also fairly crude. It looks at nonprofits from a bookkeeper's point of view, but fails to capture the effectiveness of an organization's actual programs. For that kind of in-depth information, the Web-based Charity Choices recommends going directly to the nonprofit and asking specific questions such as Why do you exist? and What have you accomplished?
All this research isn't easy. Which makes it tempting to eschew the a la carte menu altogether and make one lump-sum donation to an umbrella fundraising organization like United Way, Catholic Charities, Commun-ity Health Charities or Mazon: A Jewish Response to Hunger. Besides making life more convenient for the donor, organizations like these also improve efficiency for the recipients. But like the groups they support, not all these umbrella agencies are equally effective. And none is going to target all the different causes my husband and I want to support.
A more individual approach is necessary when it comes to those nonprofit institutions whose programs benefit us directly: the Fletcher Free Library, public radio, the Lane Series, my synagogue. We don't think of these donations as "giving" in a purely altruistic sense, but as ponying up a voluntary user's fee -- a way of paying our fair share. A quick perusal of the donors listed at the back of the Flynn Center program reminds us that the price of our tickets doesn't really cover the cost of the concert. Just because we can't afford to underwrite an event doesn't mean we shouldn't do what we can for the institution in December.
Which brings us to our final, and most troubling puzzle, which is what does "can" mean? How much giving is enough? If five of my dollars could feed a starving family, how can I justify that much on popcorn at the movies? If our family could live comfortably in a less expensive house, what right do we have to stay here, rather than moving into a smaller place and giving COTS the money we'd save on mortgage payments?
Jewish law says we should give away between 10 and 20 percent of our income in tzedakah -- but not so much that we become dependent on the charity of others. Some Christians preach tithing -- giving one tenth of one's income to the church. Zakaat -- one of the pillars of Islam -- stipulates that those who have a specified amount of unused wealth at the end of the year give 2.5 percent of those savings to the poor.
Of course, not everyone gives according to the book. In the United States last year, according to the Chronicle of Philanthropy, giving individuals donated on average 6.4 percent of their discretionary income. New England residents were among the nation's stingiest, giving less than 6 percent.
Philanthropy has fallen dramatically in the last couple years, the Chronicle reports. Between 2001 and 2002, donations to the country's 400 largest charities dropped 1.2 percent, reversing a five-year trend of annual increases averaging 12 percent. Indiana University's Center on Philanthropy paints an even bleaker picture. Its Philanthropic Giving Index, which tracks attitudes among fundraisers, suggests the development directors of nonprofits are more pessimistic than ever.
The downturn in giving is in part a reflection of the spike in charitable donations that immediately followed the terrorist attacks in September 2001. People are also shelling out less, experts say, because of unease over the war in Iraq. But the main reason cited is the economic slowdown -- a fact of life that amounts to a quadruple whammy for the nonprofits. Their revenues are falling just when client need is rising, their own endowments are suffering from the same stock market downturn as their donors, and states are cutting back.
All this is good to remember as we ponder our giving options. We could sit around thinking about this stuff forever. But if we want our generosity to be rewarded next April 15, we need to get our checks in the mail by the end of December. Eventually, we simply have to acknowledge that we might not be able to make absolutely perfect donation decisions. Bottom line: Charity has a lot in common with that other virtue, love: It's better to have given and goofed than not to have given at all.