True or False: “Think Before You Donate” Charity Claims

Today we look at a graphic entitled "Think Before You Donate" which compares the compensation of several charities' executives. It encourages readers to only donate to those with lower-paid executives.

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Analysis

The first part of the claim presents five charities in a negative light. We’ll take a look at all of these claims first. To make it an even playing field among all the claims below, we’ll list executive compensation and program expense percentage for all charities below, even if they aren’t mentioned for a specific charity in the claims. Program expense is the amount spent on the cause for which they exist.

Note: The figures below are as of February 2013.

American Red Cross

Claim: President and CEO Marsha J. Evans’ salary for the year was $651,957 plus expenses 
Facts: Marsha J. Evans was CEO of the American Red Cross from 2002-2005. In December 2005 she received a severance package of $780,000. This included 18 months of salary plus $36,495 in an unpaid bonus. Based on this figure, this would work out to about $495,000 per year. A more recent CEO, Gail McGovern, actually earned more than claimed above, at $1,032,022.
Program Expenses: 92%

March of Dimes 

Claim: It is called March of Dimes because only a dime for every 1 dollar is given to the needy.
Facts: The National Foundation for Infantile Paralysis was founded in 1938 and was nicknamed the “March of Dimes” after fundraisers which requested that each child donate a dime (the name was officially changed years later). It should be noted that in 2011 President Jennifer Howse received a salary of $545,982.
Program Expenses: 66%-75%

The United Way

Claim: President Brian Gallagher receives a $375,000 base salary along with numerous expense benefits.
Facts: As of 2010, President and CEO Brian Gallagher actually made more than claimed, at $559,257.
Program Expenses: 89%-91% 

Unicef

Claim: CEO Caryl M Stern receives $1,200,000 per year ($100k per month) plus all expenses including a Rolls Royce. Less than 5 cents of your donated dollar goes to the cause.
Facts: President and CEO Caryl M. Stern’s compensation is currently listed at $454,855. There is no source or evidence to support the Rolls Royce claim.
Program Expenses: 90%-91% 

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Goodwill

Claim: CEO and owner Mark Curran profits $2.3 million a year. Goodwill is a very catchy name for his business. You donate to his business and then he sells the items for PROFIT. He pays nothing for his products and pays his workers minimum wage! Nice guy. $0.00 goes to help anyone! Stop giving to this man.
Facts: This claim is completely false. According to the Goodwill website: “82 percent of Goodwill’s revenues go directly into employment and training programs for people with disabilities and other barriers to employment!” Jim Gibbons is the CEO of Goodwill Industries International and his most recent compensation was reported to be $729,310. Goodwill has refuted some of these claims here.
Program Expenses:  92%

The next set of charities are presented in the graphic in a positive light, shown in contrast to those listed above. It should be noted that some of these veterans organizations have fundraising foundations, which are not the same as the parent organization.

It should also be noted that, despite the claims below, none of the charities here give 100% of all donations to their causes.

The Salvation Army

Claim: Commissioner Todd Bassett receives a small salary of only $13,000 per year (plus housing) for managing this $2 billion dollar organization. 96 percent of donated dollars go to the cause.
Facts: A November 2011 BBB report showed that National Commander William A. Roberts actually received $126,920 in compensation.
Program Expenses: 84%

The American Legion

Claim: National Commander receives a $0.00 zero salary. Your donations go to help Veterans and their families and youth!
Facts:  
In 2009, the three officers listed on form 990 were compensated $201,611, $152,618, and $162,787.
Program Expenses:  Did not disclose.

The Veterans of Foreign Wars

Claim: National Commander receives a $0.00 zero salary. Your donations go to help Veterans and their families and youth!
Facts:  
A 2010 report showed the top compensation for the VFW to be $238,211. The Veterans of Foreign Wars Foundation is the official charity for the VFW. The director of the Foundation is John G. Lowe, who is not compensated directly, but receives about $80,000 in compensation from affiliates.
Program Expenses: 83%

The Disabled American Veterans

Claim: National Commander receives a $0.00 zero salary. Your donations go to help Veterans and their families and youth!
Facts:  
The current National Commander of the Disabled American Veterans is Larry A. Polzin. Chairman of the DAV Charitable Service Trust is Richard E. Marbes, who received a very small compensation of $2,820 in 2011.
Program Expenses: 76%-92% (We are still looking into the reason for this discrepancy)

The Military Order of Purple Hearts

Claim: National Commander receives a $0.00 zero salary. Your donations go to help Veterans and their families and youth!
Facts:  
According to 2009 financial statements, Former Executive Director Gregory A. Bresser received a $40,000 severance payment. CFO Stephen L. Ruckman received $150,626.
Program Expenses:  Did not disclose.

The Vietnam Veterans Association

Claim: National Commander receives a $0.00 zero salary. Your donations go to help Veterans and their families and youth!
Facts:  
There is no known “Vietnam Veterans Association.” The Vietnam Veterans of America paid President  John Rowan $69,874 and CFO/Staff Director Joseph Sternburg $137,902 in 2009.
Program Expenses:  Did not disclose.

Make a Wish

Claim: For children’s last wishes. 100% goes to funding trips or special wishes for a dying child.
Facts:  
David A. Williams, CEO and President, was recently compensated $441,360.
Program Expenses: 73%-75%

St. Jude’s Research Hospital

Claim: 100% goes towards funding and helping Children with Cancer who have no insurance and cannot afford to pay.
Facts:
The 100% claim is not even supported by St. Jude, which states on their website, “During the past five years, 81 cents of every dollar received has supported the research and treatment at St. Jude.” CEO William E. Evans received compensation of $824,000 in the latest form 990.
Program Expenses:  70%-73%

Ronald McDonald Houses

Claim: All monies go to running the houses for parents who have critical Children in the hospital. 100% goes to housing and feeding the families.
Facts:  
President and CEO Martin J. Coyne, Jr. is not compensated.
Program Expenses: 79%-90% 

Lions Club International

Claim: 100% of donations go to help the blind buy hearing aides, support medical missions around the world. Their latest undertaking is measles vaccinations (only $1.00 per shot).
Facts:  
Executive Director Peter Lynch received no direct compensation, but did receive $196,847 in affiliate compensation. The organization does have a measles prevention campaign.
Program Expenses: 84% 

Bottom Line

The “Think Before You Donate” claim attempts to categorize good and bad charities, however there aren’t as many differences between them as we are led to believe. Most charities have high-paid executives, and all of those listed above incur costs that prevent them from using 100% of all monies collected toward their causes.

You should definitely research a charity before you donate, just as you should research online warnings such as these before you believe them.

 

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  • WMccreery

    I worked at SoCal Goodwill. At first they did try to help clients to get work in the real world, but when the stae of Califdrnia stopped paying for the program they reduced thier wages to the same level as a new employee, even some had there for a decade or longer. They also exiled them to the back area so they would interact with the customers!

  • Jay H. McKinley

    I do not understand our math. For Goodwill you quote them as saying
    82 % of their donations go to helping people. Yet at the end of your
    answer you say Goodwill’s expenses are 92%. How can this be?

    • waffles

      Hey Jay, and thanks for your comment. To clarify: Goodwill states that it is 82%, and the BBB states it is 92%, so we have two sets of numbers at our disposal. The discrepancy could be a variation over time or perhaps different interpretation of data.

  • Marc M

    what exactly is a “program expense”? is that how much is taken out per dollar for the company itself (paying the CEO’s, workers, etc…)? and the remainder is what is actually donated to the cause? so, for example, Make a Wish expenses are 73-75%, so only 25-27% goes to the cause? so every $100 donated, only $25 goes to help the needy, and the rest goes to Make a Wish CEO’s, presidents, employees and expenses?

    • Mighty Mo

      Mare M, if you read the top part you would have seen this: “Program expense is the amount spent on the cause for which they exist.”

    • Marjorie

      Additionally, employees’ salaries and benefits for that is spent on the programs are included in program expenses. Often this includes part of the CEO/president salary too.
      People complain about expense spent on administration and fundraising, but you can’t have reports like these without the tasks that fall into those areas. Creating financial reports, reporting to funders, employee management and stewarding donors are all critical tasks for a nonprofit. If these aren’t done right, then the nonprofit ends up in the news for being mismanaged.

  • Matt G.

    Executives are paid well everywhere. Not just limited to charities. The purpose to donate is to believe your helping a greater cause. If your gonna let these statistics change the way you donate, then dont bother. Who cares if the numbers are right or wrong. We may never know the truth anyways.

  • Diehard

    I believe that if you compare the amount that the CEO’s of the various organizations make, you should donate to those that pays the CEO’s the least and most of the money goes to the people in need! The purpose of giving is to help those in need, NOT to make yet one more fat cat have a spare mansion on some secluded island. To not give at all like Matt G. says is to not care enough to give. Giving is and should be to benefit those in need! Do so wisely, don’t just give to make yourself feel good. It’s about helping others, not yourself.Love to all!

  • Tucker

    Sorry if I’m a little late to this party but I just read this and I’m confused about the Lions Clubs entry. I’m not sure where these numbers are coming from, but the Lions, from new volunteers to the International Director are all unpaid. That’s why they claim 100% donated funds go back into the community. Where did the “84%” come from? Thanks!

    • waffles

      That’s the number reported by Charity Navigator.

  • Big Beefa

    Who was the author of this article? Who are the legitimate sources for this information? I see BBB and I’ve heard Charity Navigator as well.

    I am looking to donate money for releif efforts in the Philippines but need to make an informed decision here without getting lost in the debate over which non-profit is legit and which one is a waste. Any recommendations?

    Thanks

    • waffles

      It is a staff-written article, and all of the sources are linked. The BBB and Charity Navigator are both well-respected sources for evaluating charities.

  • Big Beefa

    Thanks Waffles

    This has been helpful.

    -Beefa

  • Jim Kress

    You do understand there is a difference between salary and compensation?

  • David

    You are better off finding a person or family in your area that truly need help with some area of their lives and give the money directly to them. Even if they blow 50% its still better than the 75-95% of your donation that goes straight into the pockets of people with enough money already.

  • Buffet

    As someone who has sometimes “given till it hurts” I am forever indebted to you for opening my eyes! Thank you.

  • johnnie

    om sorry some of these CEO are making to much money. They are charities why in the world do they make six figures? I can see a reasonable amount 50-60 a yr with a good benefit package but this is out of control.