Monday, June 27, 2016

West Virginia Floods: How To Donate

Nearly two dozen people have died in West Virginia due to historic flooding. The floods have also destroyed homes, roads and bridges. Thousands of people are still without power. 

Coast Guard responds to
flooding in West Virginia

If you feel moved to help the people impacted by this natural disaster, then please take a moment to read our tips to help ensure you don't get scammed. And you may want to consider donating to a 4-star charity, like the United Way of Central West Virginia, which has set up a flood emergency fund, or the 4-star charity Matthew 25: Ministries which is also providing relief assistance. 

Tuesday, June 21, 2016

How to Stop the Flood of Charity Mail

A day doesn't go by without a donor contacting us expressing their frustration at the number of solicitations they receive from charities. Here's an example:

It is very disturbing to me to donate, say, $25 and then for the rest of the year receive frequent mailed requests for more donations. I feel that my $25 is being spent on the cost of sending printed mailings that ask me for money. What is more, at the same time, the charities to which I donate obviously give or sell my information to other charities so that a geometric explosion of requests has resulted in several such envelopes stuffing my home mailbox nearly every day. For the past six months, I have been just throwing ALL requests for money into my wastebasket, unopened. It is a terrible waste for the charities — all that paper, all that postage, all those return labels, cards, tote bags, and other gifts. Is there any way to change this way of fundraising? ~ Charity Navigator user

If that sounds familiar to you, then we recommend you follow these two steps:
  1. Only donate to charities with a demonstrated commitment to donor privacy (look for the blue check in our A&T ratings). To make sure you don't end up on another group's mailing list, make sure that the charity you are donating to has made a promise not to share, sell or trade your personal information with any other entity. Charity Navigator's Accountability & Transparency evaluations include an assessment of each charity's donor privacy policy. To meet our criteria, a charity must have a written donor privacy policy that states it will not to sell or trade the personal information of its donors. In addition, we require that the policy be prominently displayed on the charity's website or in its marketing and solicitation materials.

    As a Charity Navigator registered user, you can use our advanced search feature to find a list of charities that are financially efficient, match your charitable interests and have a confirmed donor privacy policy.
  2. Give anonymously.Take advantage of Charity Navigator's Giving Basket which lets you, the donor, decide how much personal information you want to share with the charity - from your full contact information to none of it. Giving anonymously kills two birds with one stone - the charity itself can't pester you with endless appeals nor can it sell your contact information to others.

Some additional steps that will help you reduce the mailings you receive from the charities you support and from those you've never heard of before:
  • When you make a donation, make sure you 'opt-out.'
    Of the charities we've reviewed, many have 'opt-out' policies. We notify you when this is the case so that you, as a donor, know that you must tell the charity that you wish not to have your personal information distributed to any other entity. Depending on the charity, you can 'opt-out' either by calling, writing or clicking a button when making an online donation.
  • Refrain from giving small donations to many charities. The quickest and most surefire way to wind up on mailing lists is to make lots of small charitable donations. Small donations, such as $25, barely cover the costs the charity incurred in soliciting the gift. To recoup those costs, many charities will simply sell the donor's name to another charity doing similar work.
    Charities obviously tend to be much more protective of donors that give large gifts. The charitable marketplace is crowded with many charities pursuing similar missions. Since the majority of donations come from individuals and not foundations, corporations or the government, charities are in competition with each other for your donation. A charity would never divulge a mid- to high-level donor's personal information to another charity. The revenue it could generate by selling the donor's information simply doesn't outweigh the risk of losing that donor to the other charity. If you've taken the time to find an efficient and effective charity whose work in which you believe, then it shouldn't be too difficult for you to decide to concentrate your giving on that charity instead of spreading your money around to many charities with whom you are less familiar.
  • Call or write the charity directly. 
    Contact the charity that sent you the solicitation and ask to be removed from their mailing list. Additionally, ask for the contact information of the organization that sold them your name- the source of your troubles. Then contact that organization to request that it too refrain from selling or trading your personal information. Be sure you have the appeal letter on hand in case the charity needs specific information from it in order to locate your name in its records. 

    Even if you plan to support a charity that sends you too frequent mailings, we recommend that you contact the charity and let its staff know of your giving plans. Will you donate once a month, once a quarter, or once a year? Responsible and well-run charities will welcome your call. They prefer to have donors that they can depend on to give without having to be reminded. This helps the charity improve its fundraising efficiency and ultimately dedicate more time and resources towards the programs you wanted to support in the first place.
  • Register with services that aim to stop junk mail. 
    Although there is no regulation that mandates that charities (and corporations) honor your requests to opt-out of their mailing lists, these services may still be of help.
    • Through the Mail Preference Service program, the DMA maintains a list of individuals that do not wish to receive unsolicited mail. Be sure to specify that you do not wish to receive solicitations from both commercial and charitable organizations. If you fail to do so, then the DMA will automatically place your name on the list provided to for-profit entities only.
    • Take a photo of the junk mail you wish to stop and send it to PaperKarma. They’ll contact the mailer for you and ask that they remove you from their distribution list.
    • You can report unwanted mail to Catalog Choice and they’ll process your request for you.
Visit our website for more tips for donors. 

Monday, June 20, 2016

The Power of Individual Donors

Charitable giving continued its upward trend in 2015, as an estimated $373 billion was given to charitable causes.  For the second year in a row, total giving reached record levels, and taking 2014 and 2015 together, charitable giving has increased over 10% (using inflation-adjusted dollars). This increase and the overall size of charitable contributions is further testament to the integral role charities play in our society, a role which continues to grow.

But do individual donors recognize the power of their donations? In 2015, the largest portion of charitable giving came from individuals and totaled $264.58 billion.  Individuals were also responsible for two-thirds of the overall increase in charitable giving from 2014.

How much do we give?
  • Total giving to charitable organizations was $373.25 billion in 2015 (2.1% of GDP). This is an increase of 4.1% in current dollars and 4% in inflation-adjusted dollars from 2014.
  • This is the sixth straight year that giving has increased and the second straight record-setting year, following 2014’s total of $358.38 billion. 
  • Comparing GDP growth and change in charitable giving over 2010-2015, the average increase in giving to charitable causes (3.6%) is greater than the growth of GDP (2%).
Who is giving?
  • As in previous years, the majority of that giving came from individuals. Specifically, individuals gave $264.58 billion, accounting for 71% of all giving and representing a 3.8% increase over 2014 (3.7% when adjusted for inflation).  
  • Giving by bequest was up 2.1% in current dollars (or 1.9% when adjusted for inflation) to $31.76 billion.
  • Foundations gave $58.46 billion which represented an increase of 6.5% (or 6.3% when adjusted for inflation).
  • Corporations donated $18.45 billion for an increase of 3.9% (or 3.8% when adjusted for inflation).
Where do the donations go?
  • International organizations saw the largest increase and the first increase in three years. Giving to International organizations was up by 17.5%, totaling $15.75 billion.  This may be due to an increase in the number of large international organizations, or that giving in this area took longer to recover from the recession.
  • The portion of charitable giving going towards Religion increased for the second year in a row, going up by 2.7% from 2014 to $57.48 billion.
  • Giving to Foundations was the only area where donations decreased, a decrease of 3.8% from 2014, totaling $42.26 billion.
  • Contributions to Education organizations continue to steadily increase, this year by 8.9% to a total of $57.48 billion.
The charitable sector would not be growing the way it is if it were not for individual donors. In 2015, donations from individuals accounted for over two-thirds of all donations. If you add in gifts from bequests and family foundations, which are essentially gifts from individuals, then the category accounted for nearly 80% of all giving in 2015. This percentage shows the power of donations for individuals, rather than from large foundations or corporations, and the importance of charitable giving by individuals to the entire sector. 

Thursday, June 16, 2016

Should the CEO's Compensation Influence Your Decision to Support a Charity?

As a donor, there are a plethora of factors that will impact your decision to donate to a specific charity. These factors range from how much money a charity uses on programs and services in comparison to administrative expenses, to where the charity is located, or how recognizable the charity name is, only to name a few. Through recent observations, we have seen a growing increase in the importance of one factor in particular regarding donor support. This being, CEO compensation. Many donors find skepticism in donating to charities led by CEOs who are making what they deem to be "excessive" incomes.

Charity Navigator’s most recent CEO Compensation Study, examined about 4,000 U.S based mid-large sized charities. The study revealed that although there are outliers in these statistics, charity CEOs receiving an insanely excessive amount of pay are in the minority. Also, salaries for CEOs often vary greatly based on location of the charity, with CEOs in the Northeast outearning CEOs in the Mountain West by an average of $47,000. The size of a charity plays a large role as well, showing that CEOs managing a larger charity make about $160,000 more than CEOs who run smaller charities. A charity’s mission plays a significant role in CEO compensation, with heads of education charities earning an average of $74,000 more than CEO’s of religious charities.

So now that this information is out to the public, what does this really mean? Well, for one, we do not feature CEO compensation as a facet of our Financial Health ratings, however, we still provide the information as a method of transparency. What we have done, is offered various tips below, which we hope will guide potential donors on how to gauge CEO compensation themselves.

Tip #1:

  • Obtain comparison data. Use the information provided in our study to compare a CEO's salary to other similarly sized charities, as well as those in the same category and region.
    • Our 2015 Metro Market Study provides median CEO salaries for 30 large cities.
    • Charity Navigator registered users can compare the CEO salaries of specific charities on their "My Charities" page and on each charity's rating page by clicking on the "Compare These Charities" link.
    • Registered users can also access Charity Navigator's Sector Analysis Tool to calculate the average CEO pay by cause and state.

Tip #2

  • Find out if the charity has a Compensation Committee
    • It is important for charities to conduct independent reviews of their CEO compensation through the use of comparative data. Check out our Accountability & Transparency Methodology so you can determine if a charity follows this best practice.
    • If the charity you are considering has not yet been rated by us, then we encourage you to review its Form 990 or contact it directly to inquire if it has a compensation committee in place and how it makes salary decisions.

Tip #3
  • Consider the performance of the charity in relation to the CEO's pay.
    • If you come across a charity whose CEO pay is higher than other similar charities, don't immediately dismiss that charity's request for funding. You're better off supporting a charity that is fiscally efficient, accountable and transparent, achieving its programmatic goals and paying its CEO well, than a charity that has substandard fiscal health, fails to live up to its mission, but under-pays its CEO.

So before you decide on supporting a particular charity, make sure that you thoroughly analyze the implications of the CEO’s compensation. Paying attention to these tips will help you make the most of the dollars in which you decide to give.