What happens to charity money ? A question about morality

[doc_bean]

There's been a bit of a stir here about the charity 'industry'. I'm guessing everyone is familiar with the people that go to busy shopping streets and the likes and ask people to donate money for their charity. Normally this work is carried out by volunteers, however in the last few years, mostly due top the lack of people willing to be volunteers, the charities have been paying people to do this. Paying them pretty darn well actually. They claim it has raised their income, and the money they can spend on actual charity. So it is actually the best thing for the people they're trying to help.

Let's assume this is true, because otherwise we'd get another thread on corruption and charity, been there, done that.

Now, originally I thought this was okay, I tend to be a pragmatist more than anything else, and if it helps the people they're supposed to help, it can only be a good thing right ? But then I remembered donating money to doctors without borders, and getting their paperwork every month... My money was supposed to help little Palestian children (or whoever, if they're poor and living in a war zone or third world country, it's fine by me), I can accept a little overhead, the people working for charity have to eat too, and a little bureaucracy is inevitable but i do not want to finance the local print shop instead of vaccines.

So really, the questions I want to throw before the wolves of the backroom: Is it morally acceptable for a charity to use (part of) its money to gain more money ? It would make sense to do this of course, you've got to motivate people to give, but is there a limit to the amount of money you can use for this ? Or is it simply a question of optimizing the amount of money you can the actual charitable work ? And if this is the case, won't these methods result in competition between the charities, inevitably leading to a reduced (total) amount of money that can be used for charitable works ?

[Just A Girl]

well i think you must spend money to make money.
however I do beleve there spending the money in the wrong places...

For instance.

We get a charity letter weekly, And in this letter is a form So you can donate regularly from your bank account,
And a Pen.

I now have about 60 of these pens, Which cant be free.
The form was filled out the 1st time it arived.

And now all i do is open the letters, keep the pen and throw away the rest.
This must cost money,
And it has no gain.
So its not a matter of if its ok to spend money to make money.
its more is it ok to spend omney on THIS to make money.

[solypsist]

Is it morally acceptable for a charity to use (part of) its money to gain more money ?


of course it is, provided:

1. they gain money, and not lose it.
2. the money is either spent for overhead (which is usually is) or used for the "charity" part.

any organization, even a charity group, that fails to think in business terms of fiduciary security for its own sake, won't last long. even the .org needs $ - most of the banner revenue goes into the server fees and only a fraction into Tosa's computer-game-of-the-month membership.

[Redleg]

of course it is, provided:

1. they gain money, and not lose it.
2. the money is either spent for overhead (which is usually is) or used for the "charity" part.



One of the few times I will agree with Solypist without qualification. :2thumbsup:

[doc_bean]

of course it is, provided:

1. they gain money, and not lose it.
2. the money is either spent for overhead (which is usually is) or used for the "charity" part.

any organization, even a charity group, that fails to think in business terms of fiduciary security for its own sake, won't last long. even the .org needs $ - most of the banner revenue goes into the server fees and only a fraction into Tosa's computer-game-of-the-month membership.

But when people give to a charity, they expect their money to be used for helping the needy. Using the money to gain more money, while it will actually help those needy people more in the long run (potentially) leads to angry donators, which leads to less donations. how often haven't you heard here in the backroom, or in real life, that people won't give money to charity anymore ? I think this kind of behaviour isn't going to help charities in the long run. At least when the 'news' got out over here a lot of people said they were never going to donate again.

A second problem is that it would seem reasonable that people will only spend a limited amount of money each year on charity, so if different charities all use these kinds of tactics to raise money, they're effectively competing against eachother for your money. Money is spent on remaining competitive and not on the actual charitable work. This leads to less money for the needy then there could have been.

Now, I do believe in campaigns to make people donate money to charity (as a whole), and do believe the different charities should have the opportunity to present themselves and their goals to the people, and they can use donation money to do that, but this should be a marginal amount.

I wish I had the figures on how much these charity workers made, but they made good money, often above what the average person makes (an hour) and they got bonuses when they attracted new donators, these bonuses were about what an average person would donate that year to the charity. These aren't marginal costs anymore.

[solypsist]

it's the whole give-a-man-a-fish or teach-a-man-to-fish sort of thing.

a donated dollar fed directly to a cause only goes as far as one dollar, and then it's over..

a donated dollar put into a bond becomes three dollars in the near future. one dollar is kept in trust, while the rest are fed into the cause. the donation now goes twice as far, with the original amount in rotation, so it's not over.





But when people give to a charity, they expect their money to be used for helping the needy. Using the money to gain more money, while it will actually help those needy people more in the long run (potentially) leads to angry donators, which leads to less donations. how often haven't you heard here in the backroom, or in real life, that people won't give money to charity anymore ? I think this kind of behaviour isn't going to help charities in the long run. At least when the 'news' got out over here a lot of people said they were never going to donate again.

A second problem is that it would seem reasonable that people will only spend a limited amount of money each year on charity, so if different charities all use these kinds of tactics to raise money, they're effectively competing against eachother for your money. Money is spent on remaining competitive and not on the actual charitable work. This leads to less money for the needy then there could have been.

Now, I do believe in campaigns to make people donate money to charity (as a whole), and do believe the different charities should have the opportunity to present themselves and their goals to the people, and they can use donation money to do that, but this should be a marginal amount.

I wish I had the figures on how much these charity workers made, but they made good money, often above what the average person makes (an hour) and they got bonuses when they attracted new donators, these bonuses were about what an average person would donate that year to the charity. These aren't marginal costs anymore.

[doc_bean]

it's the whole give-a-man-a-fish or teach-a-man-to-fish sort of thing.

a donated dollar fed directly to a cause only goes as far as one dollar, and then it's over..

a donated dollar put into a bond becomes three dollars in the near future. one dollar is kept in trust, while the rest are fed into the cause. the donation now goes twice as far, with the original amount in rotation, so it's not over.

Putting money into a bond isn't the same as using money to pay for marketing campaign, surely ?

[solypsist]

charities are not exempt from taxes - and spending on advertising/mailings/etc. grants tax breaks that end up costing less than if the charity didn't advertise at all.

*for example, the nat'l MS Society spent about 1.4% of its budget on advertising, of which that amount was taxed at a rate of .02%.
if they had not spent it, the 1.4% would have been taxed at .4%, which is a big difference. the added part is that the charity wouldn't have advertised, which is a loss of potential impulse donors, etc.

this of course, does not mean that charities that advertise do not underperform. in 2005, a good number of charities filed for chapter 11 bankruptcy.



Putting money into a bond isn't the same as using money to pay for marketing campaign, surely ?


*i had to go to a lot of internet sources, each very scattered and roundabout, to get this information.


okay one more thing:

charities have only recently begun this practice. why? over the last 25 years or so, charities have been the victims of less funding and more demand for their services.

[KukriKhan]

The head of the SoCal Red Cross here got fired and prosecuted (!) for failing to deliver money earmarked for brushfire victim relief in '03. So Doc_Bean is on the right track with the issue being sensitive.

And Soly has it correct as well, that legit charities have a tougher row to hoe nowadays here in the US.

Federal employees get some help with this (on an individual level). Once a year they conduct the "Combined Federal Campaign" , which publishes a 30-page listing of pre-vetted (as in: never prosecuted) charities, including a paragraph from them, explaining what they do, and a cross-checked declaration of what % of money goes to 'overhead'. Makes it easier to pick.

[Kralizec]

I also agree with Soly.

However in the city where I live, the streets where the most shopping public attends (and therefore lots of pedestrians), its often the same group of people that walks up to people and starts asking them questions. These people are hired sometimes by newspapers trying to get more subscriptions or some other profit driven organisation, or charities like WWF and Amnesty international.
Most people who come there regularily recognise these people from a safe distance and walk in a huge curve around them or walk past them without even giving them a nod in their direction, for the same reason people hung up when they're called by solicitors trying to sell them junk, or ignore spam mail. I can't imagine this approach is even remotely cost effective.

[Tribesman]

The head of the SoCal Red Cross here got fired and prosecuted (!) for failing to deliver money earmarked for brushfire victim relief in '03. So Doc_Bean is on the right track with the issue being sensitive.

It seems the organisation didn't learn its lesson. How many of its staff are now being prosecuted for stealing the money from the Katrina relief program ?

[doc_bean]

charities are not exempt from taxes

They are here (I'm pretty certain), and donations above a certain amount (usually around €30) are tax deductable.

[KukriKhan]

The head of the SoCal Red Cross here got fired and prosecuted (!) for failing to deliver money earmarked for brushfire victim relief in '03. So Doc_Bean is on the right track with the issue being sensitive.

It seems the organisation didn't learn its lesson. How many of its staff are now being prosecuted for stealing the money from the Katrina relief program ?

19 at last count
http://www.timesonline.co.uk/article/0,,11069-1962241,00.html

I haven't seen fresh news on this, though.

To their credit, regular Red Cross employees blew the whistle on those out-sourced scammers.

[Byzantine Mercenary]

money given to charity is not a limitless recource and spending it on advertiseing is a waste, if i give £100 and that is spent on advvertiseing that produces £400 then £500 pounds would have been given in good faith and only £400 would actually be spent where needed, that seems wrong.

[Alexanderofmacedon]

I'm sure all too much is going away from the needy...

[Alexander the Pretty Good]

The big problem seems to be too often too much of the overhead goes to the suits at the top.

I have no problem with money being invested for charity, as long as the head isn't getting an inordinate cut of that.

Which begs the question, how much is too much for salaries of those running a charity organization full-time?