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Donor, Know Thy Charity: The Best, Biggest and Worst Nonprofits

Donor, Know Thy Charity: The Best, Biggest and Worst Nonprofits

Last updated on: February 25, 2013 at 8:28 pm by Christian Piatt

Donor, Know Thy Charity: The Best, Biggest and Worst Nonprofits 2013-02-25T20:28:02+00:00 Christian Piatt

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Nearly everyone has felt the pinch of the economic slump in the past five years. But despite tough times, Americans tend to be a remarkably generous nation of people. According to Grantspace.org, based on recent reports from Giving USA Foundation and the Center on Philanthropy at Indiana University, “Total charitable contributions by individuals, corporations, and foundations was an estimated $298.42 billion in 2011, up 4 percent in current dollars and 0.9 percent in inflation-adjusted dollars from a revised total of $286.91 billion in 2010.”

This breaks down to an average of nearly $1,000 for every man, woman and child in the nation. Not bad, right? But how much of that money is actually going to the causes we care about? How do we know if the sacrifices we make are feeding the hungry and housing the homeless, rather than lining the pockets of a corporate CEO?

There’s a lot of information floating around out there about who makes what, and how effective various charities are. Unfortunately, much of what is passed around is either outdated or totally inaccurate. So I decided to do my own investigation to see who are the best out there when it comes to putting my hard-earned charitable dollars to work, especially compared to some of the biggest, most popular nonprofits we tend to give to.

Of course, there are lots of criteria we could use in deciding where to give our money. Some prefer local organizations, where they can see direct results of their gifts, right in their own community. Others lean toward historically established, widely known nonprofits who have proven their staying power over time. And of course, there are factors like the organizational mission statement, their stance on particular social issues and whether that charity has been in the news lately (not always a good thing).

For my own purposes, I decided to boil it down to three factors: size, CEO compensation and organizational efficiency. Again, there are many ways to determine the latter, though having spent more than a dozen years in the nonprofit fundraising profession myself, the one that people tend to be most interested in is efficiency. The easiest way to measure this is to break out what percentage of the charity’s budget goes toward “indirect,” or administrative costs (like the CEO, fundraising, and other administrative staff), compared with the amount committed to “direct services.”

To be clear, “direct services” doesn’t refer to money or goods given directly to those in need. Generally, it includes all staff and organization costs related to those direct services. So whereas a Vice President or a financial officer would be an indirect expense, a case manager or nurse – along with direct assistance, meals and housing – would be lumped together as direct expenses.

Finally, because there are literally more than a million charities in the United States, I wanted to boil my list down to those nonprofits that were large enough for most of us to know about them. So I looked only at organizations with annual budgets of $100 million or more.

THE BEST

So, given these factors, who are the best of the best? Following are five major-league top performers:

Name: Direct Relief International
Mission: Healthy people. Better world. Since 1948.
Annual Budget: $405,035,176
Efficiency: 98.8%
CEO Salary: $294,097

Name: The Conservation Fund
Mission: America’s partner in conservation.
Annual Budget: $242,376,138
Efficiency: 97.4%
CEO Salary: $429,647

Name: United Nations Foundation
Mission: Connecting people, ideas and resources with the United Nations.
Annual Budget: $192,737,803
Efficiency: 86.5%
CEO Salary: $399,949

Name: Teach for America
Mission: Building the movement to eliminate educational inequity.
Annual Budget: $270,472,850
Efficiency: 83.4%
CEO Salary: $364,062

Name: The Rotary Foundation of Rotary International
Mission: Enabling Rotarians to advance world understanding, goodwill, and peace.
Annual Budget: $236,590,554
Efficiency: 86.9%
CEO Salary: $166,981

THE BIGGEST

Interestingly, none of these made the top-ten list of most followed charities, according to Charity Navigator. So how do the biggest of the Big Boys compare to our frontrunners listed above? For the five organizations operating with an annual budget of $1 billion or more, it’s a mixed bag:

Name: American Red Cross
Mission: Helping people prevent, prepare for and respond to emergencies.
Annual Budget: $3,422,010,386
Efficiency: 92.2%
CEO Salary: $501,122

Name: Feeding America
Mission: The nation’s food bank network.
Annual Budget: $1,179,643,651
Efficiency: 97.2%
CEO Salary: $524,052

Name: Smithsonian Institution
Mission: Seriously amazing.
Annual Budget: $1,101,404,223
Efficiency: 72.1%
CEO Salary: $517,318

Name World Vision
Mission; Building a better world for children.
Annual Budget: $1,078,549,155
Efficiency: 85.6%
CEO Salary: $379,861

Name: Food for the Poor
Mission: Serving the poorest of the poor.
Annual Budget: $1,050,829,851
Efficiency: 96.8%
CEO Salary: $388,979

THE WORST

Finally, the list would hardly be complete without including some of the biggest offenders. Keeping with the same criteria, we looked only at those charities with annual budgets of $100 million or more. This means that, although there are some bad guys not listed here, these are the ones with the broadest reach, and they’re also the ones you’ve most likely heard of:

Name: Paralyzed Veterans of America
Mission: Maximizing the quality of life for veterans and all people with spinal cord injury or disease.
Annual Budget: $114,364,700
Efficiency: 33.1%
CEO Salary: $189,983

Name: American Diabetes Association
Mission: Cure, care, commitment
Annual Budget: $197,368,988
Efficiency: 66.5%
CEO Salary: $545,950

Name: March of Dimes
Mission: Improving the health of babies
Annual Budget: $207,290,112
Efficiency: 65.9%
CEO Salary: $545,982

Name: Hadassah, The Women’s Zionist Organization of America
Mission: Devoted to Judaism, Zionism, and American ideals.
Annual Budget: $136,654,319
Efficiency: 48.1%
CEO Salary: $78,888 (three other administrators are paid more than $170,000 each)

Name: Ducks Unlimited
Mission: A world leader in wetlands conservation.
Annual Budget: $155,701,461
Efficiency: 77.0%
CEO Salary: $257,839 (two other administrators are paid more than $280,000 each)

Don’t see your preferred charity on the list? Visit Charity Navigator yourself and look them up. This service assesses more than 6,000 nonprofits around the world. Another good resource is Guidestar, which posts nearly every nonprofit’s financial reports for public review.

Perhaps the best advice I can offer is to be as discriminating about the charities you support as you are about the products and services you pay for. Some of the most notorious charities make the most overtly emotional appeals, hoping to create a “feel good” moment for donors. But every nonprofit organization should freely offer up their annual report and copies of their 990 financial statements upon request. If they won’t, chances are they’re either trying to hide something or they’re simply too disorganized to fulfill the request. Either way, the lack of transparency is telling.

An educated public is an empowered public. Tell your dollars where to go and hold those you entrust with your gifts accountable. Our collective impact yields far more than a warm, fuzzy feeling. We can change the world if we’re smart about it. Do your homework; it’s worth the extra effort.

american diabetes association

direct relief international

paralyzed veterans of america

rotary foundation of rotary international

smithsonian institution

teach for america

the conservation fund

united nations foundation

women's zionist organization of america

world vision

worst nonprofits

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