Give Well shares the concerns of Guidestar, Charity Navigator, and the Better Business Bureau Wise Giving Alliance, which recently issued a joint letter about what they call the “overhead myth”—that charities with the lowest overhead are the most efficient at spending donor funds. “The overhead ratio can be applied in misleading ways,” Berger said. “Organizations should be able to invest in overhead to do their job. Buying computers can be overhead, but if it enables the organization to operate more efficiently, that shouldn’t be held against them.”
The Times/CIR investigation found that the 50 worst charities spent nearly $1 billion in donor money on fundraising. Berger pointed out that this is just .05 percent of all money raised for charity during that period.
One newspaper, the Desert News, had some criticism of the investigation, though its critique was not particularly persuasive. Mercedes White’s story for the Salt Lake City paper disputed the idea that high overhead costs, including the use of telemarketing firms, indicates poor charity performance. One part of the story put it this way:
In other words, it takes money to raise money. If charities did not spend money on fundraising and campaigns to increase awareness, many important problems would go unnoticed and opportunities to do something about them would be missed. For this reason, Goggins [Ann Gregory Goggins, senior director at the Bridgespan Group] argues that overhead is not the most meaningful way to judge a charity, and the ‘overhead is bad’ narrative can get in the way of more meaningful analysis. ‘At the crux of this argument is the fixation on a number that isn’t meaningful,’ she said. Different charities require different levels of overhead to achieve their objectives, she said.
But the Times/CIR investigation did not argue that all high overhead is bad. And the Deseret News piece ignored the fact that the Times/CIR investigation found that a number of the charities identified as paying the most to fundraisers had also been cited by state regulators for violations ranging from deceptive telemarketing to fraud. White did not respond to interview requests. She also did not ask the two reporters on the project for a response to the criticism she raised. CJR did, and Taggart replied in an email:
Every charity has salary, overhead and fundraising costs. Our investigation focused on organizations that have made high-cost fundraising a way of life. We looked at 10 years worth of data. One or two costly fundraising campaigns were not enough to make the list. We vetted our methodology for how we identified the charities with several experts in advance of publication.
CNN also collaborated in the Times/CIR investigation, contributing reporting on charities that inflate the value of gifts made to other charities—gifts that have included things like 11,000 bags of coconut M&Ms shipped to a homeless veterans’ shelter and $2,600 worth of pet medicine valued at more than $816,000 on the charity’s tax filings.
The Times/CIR investigation did not mention a recent charity scandal that cost Florida’s lieutenant governor her job. Jennifer Carroll resigned as lieutenant governor shortly after nearly 60 people associated with Allied Veterans of the World were arrested on illegal gambling, racketeering, and money laundering charges. Carroll had done public relations work for the Florida non-profit, which was using internet sweepstakes cafes to raise money. Hundley said Allied Veterans was not included in the investigation because the organization wasn’t paying a professional fundraiser. “We didn’t catch all the bad charities out there,” she said. “This is just one way to look at questionable charities.”
Since the investigation was first published, CIR has begun to tweak the database to make it searchable by state, after a newspaper reporter requested that. “For the Center for Investigative Reporting, there’s always an interest in creating tools that other reporters can use,” Taggart said. She gave a presentation at the national conference of Investigative Reporters and Editors recently on the project, and has posted a guide to the databases online as well as a tip sheet.
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