Welcome to Charity Navigator's Blog!

The team from Charity Navigator, the nation's largest independent charity evaluator and leading donor advocate, shares their thoughts on emerging nonprofit-sector issues and offers tips to better inform your intelligent giving decisions.

Thursday, March 28, 2013

What to Do When Disaster Strikes

Americans are generous and eager to help their neighbors in a crisis - whether those neighbors are next door, across the country, or on the opposite side of the world.

A month after Superstorm Sandy hit the Northeast coast, charities had raised more than $244 million. In the first month after the 2011 earthquake and tsunami in Japan, Americans had contributed more than $246 million to the cause. Charities responding to the devastating 2010 earthquake in Haiti received more than $709 million in donations in the first month and a total of $1.4 billion within the first year. One month after Hurricane Katrina in 2005, U.S. donors gave more than $1.4 billion which ultimately grew to $6.5 billion during the years that followed.

Here are some ways that local communities can band together to both support the victims of disasters and to make sure they are prepared to meet their own needs in a future crisis:
  1. Have a fundraiser and donate the proceeds to an established charity. Bake sales, block parties, garage sales, lemonade stands and pancake breakfast fundraisers are all good ways to bring a community together for a worthy cause. Almost any gathering can be used as a venue to collect donations for disaster relief.
  2. Hold a blood drive or donate blood. Disaster victims often need blood donations. But even if a local drive isn’t able to send your blood to an distant impacted region, your generosity, inspired by that far away disaster, will help someone in need in your own community.
  3. Get trained as a disaster volunteer. In a time of crisis, properly trained disaster volunteers are the only people with the skills and knowledge necessary to help. Natural disasters are a fact of life, and developing a pool of trained individuals ready to respond and help the victims is one of the key ways we have to prepare ourselves in the event of a future emergency.
  4. Volunteer your time or donate to a charity in your local community. In a time of emergency, the poor, sick, elderly, and most vulnerable members of our communities are the ones who suffer the most. By volunteering or donating to a local charity you can reach out and connect with the most vulnerable members of society and make your community and the nation as a whole, stronger and better prepared to face whatever challenges lie ahead.
See the Tips section of our site for more information on how to select a disaster relief charity to support.

Tuesday, March 26, 2013

Charity CEO Compensation - How Much Is Reasonable?

We regularly get questions from donors who want to know if the charity they are considering supporting is overpaying its CEO. To help them make that determination, we offer the results of our most recent CEO Compensation study which are summarized in this infographic:

Wednesday, March 20, 2013

Is Charity Navigator the Mean-Looking Hall Monitor from South Park?

According to an article in the Chronicle of Philanthropy, that’s how the Direct Marketing Association described us in their recent nonprofit conference. Why? The Association and its nonprofit members (who rely on direct mail to solicit funds from the public) do not like the recent adjustment we've made to our rating system in respect to their “Joint Cost Allocations.”

Haven’t a clue about joint cost allocations and what that has to do with your charitable endeavors? Well, you’re not alone. Let me explain.

According to an accounting rule known SOP 98-2 or ASC 958-720-45, charities are permitted to report a portion of their costs from combined educational campaigns and fundraising solicitations as program costs. And when they do, the IRS requires that they disclose the allocation on the Form 990. In most cases, charities utilizing this technique allocate a small percentage of their solicitation costs to program expenses from fundraising expenses. However, we believe that donors are not generally aware of this accounting technique and that they would not embrace it if they knew a charity was employing it. Therefore, as an advisor and advocate for donors, when we see charities using this technique we factor out the joint costs allocated to program expenses and add them to fundraising (there are a few rare exceptions where we allow joint cost allocations to stand). The result is that out of more than 4,000 charities reviewed thus far, 66 now have lower star ratings.

Why did we make this change to our methodology? Check out the Chronicle of Philanthropy’s article, Watchdog Cracks Down on Misleading Statements on Fundraising Costs, for the background on this adjustment to our rating system. It has to do with the National Veterans Foundation, Anderson Cooper and our commitment to helping donors make informed giving choices.

So, are we offended to be called the “Mean-Looking Hall Monitor from South Park?” No, we can take it. This type of response is in the nature of what happens when you make judgments and rate organizations. There will always be some that you cannot please --- we are a charity rating service after all!  

But what really concerns us is that wasting time calling us names doesn't change anything. Where is the outrage in the sector with regards to excessive joint cost allocations? Where are the charities that refrain from this practice? They should be standing up and demanding that other charities change their ways. Why are the charities that engaged in inefficient direct mail fundraising continuing to do so? It is a short-sighted, scorched-earth policy that infuriates donors when they learn how much of their gift was devoted to fundraising. In the end it violates the trust that donors have in the entire sector and can put all of us at risk of losing funding. That is truly what is mean spirited and defies common sense!

Monday, March 18, 2013

Stretch your Donations

Why donate appreciated assets instead of liquid cash? The advantage is that you benefit from the full amount of the asset in tax deductions (that you were planning on giving anyway) and you do not have to pay taxes on the capital gains. Furthermore, when the organization (provided it is a qualified 501(c)3 public charity) sells the stock, it is also exempt from paying the capital gains taxes. That is a win-win!

For example, let’s take someone making a salary of $50,000 that usually donates 10% of their annual income. In a typical year, this person would donate $5,000. If this person had an appreciated asset such as stock, this donor could donate $5,000 in stock instead. If the stock was purchased at $2,500 and then appreciated 100%, this gain of $2,500 would be taxable at 20% (generally). 20% of $2,500 is $500. In donating the appreciated asset (stock) instead of cash, the donor still benefits from the tax deduction of $5,000.

However, by donating and not selling the appreciated stock, the donor also benefits by an additional $500 by avoiding the capital gains tax. Not a bad savings for a relatively small change in the way the donor made his/her donation.

Of course, increasing your giving is always appreciated, but at the end of the day, this minor tweak provides you with more disposable income to utilize at your discretion.

Happy saving and giving!

Did you know that Donor-advised funds can be a helpful giving tool? Keep checking our blog for more information!

Wednesday, March 13, 2013

Giving To Charity Can Ease the Tax-Time Burden

Americans made more than $260 billion in tax-deductible charitable donations in 2011. With April 15 approaching, you should know how much you can deduct, what types of contributions are deductible and how to best itemize deductions on your income taxes. Check out our tips now for help in answering these important questions.
  • Article: Accurately Deduct Charitable Gifts
  • Tip-Sheet: Tax Benefits of Giving
  • Giving Calculator: Displays the net cost of a donation and your tax savings
  • Quiz: Are you maximizing your charitable donation deductions?
  • FAQs: Questions about the tax implications of charitable giving 

Monday, March 11, 2013

Kony Anniversary

The viral video, Kony 2012, caused quite a dramatic public reaction last year and caused the highest spike in traffic in our site usage ever (here's what we said about the issue at the time). As you may recall, the aim of the KONY 2012 campaign was to make Joseph Kony the most wanted man in the world and see his arrest before December 31st, 2012. While he has not been arrested, Invisible Children did live up to its goal of raising awareness. Its mission specifically states that it will 'use film, creativity and social action to end the use of child soldiers in Joseph Kony's rebel war and restore LRA-affected communities in Central Africa to peace and prosperity..."

In the spirit of our President & CEO's Report for March 2013, let's see how Invisible Children would fare on the first element of Results Reporting, Alignment of Mission, Solicitations and ResourcesOn their site, Invisible Children is very clear as to their mission and their programs and approach to tackle the LRA conflict and bring it to an end, which is their only focus. But is the publicized information consistent with their actual program expenditures as stated on the Form 990? Invisible children does seem to pass this litmus test when we investigate into their Form 990 where it states that they use 80.5% of their expenses on the following activities: roughly 11.18% on their media program, 43.24% on their mobilization program, 12.73% on their protection program and 32.85% on their recovery program. 

Whether you think, Invisible Children is attacking the problem correctly is a different and personal matter, however, they are transparent about their programs. 
So, all this comes down to one important question: are they compatible with your philanthropic goals? That can only be answered with some introspection and investigation into the organization.

Thursday, March 7, 2013

The Sad Saga Continues

As we've already mentioned on this blog, donors were duped into supporting the Hurricane Sandy Relief Foundation thinking it was a legitimate, well-run charity that was providing aid to victims of Superstorm Sandy. 
Image from BigStock

Now, we're learning that among the well-meaning donors were hundreds from South Carolina. Apparently, several business owners in the Hilton Head area came together and launched "Operation Southern Hospitality" to collect and send supplies to NJ. They managed to collect $1 million worth of supplies at more than 150 locations. They even had local children write notes of support and encouragement to the victims of Sandy. Sadly, it appears that the donations were never distributed by the Hurricane Sandy Relief Foundation to victims at the Jersey Shore. Instead, the clothing and other supplies were sent to a Northern NJ warehouse, where they still sit.

This story is terribly sad for both the donors and for the victims who could have used the supplies. In fact, it makes me sick to my stomach. But it is worth retelling here as a cautionary tale for donors as it illustrates several of our disaster-related giving tips:
  • Give To An Established Charity (with a track record of dealing with disasters)
  • Do Not Send Supplies 
  • Be Inspired By Social Media, But Still Do Your Homework 
(Visit Charity Navigator's site for a list of vetted charities responding to Hurricane Sandy.)

Wednesday, March 6, 2013

Couldn't Have Said It Better Ourselves!

We got a donation yesterday with a very eloquent and well written letter that went with it. I feel compelled to share:

"Your organization and website were a Godsend; I was so conflicted and confused as to which charitable causes and entities merited my support, it was driving me to distraction!"

This donor continues: "...I had to intuitively select which charities I would support and which to ignore. (I always felt an overbearing sense of guilt for arbitrarily excluding this charity over that without having any tangible or creditable rationale in the unavoidable decisions of selection and rejection.) Thank you for providing some intelligible scrutiny, gradation and assessment of charities. That information stands as a voice of sanity and reason amid the cacophony of promoters, hawkers, beggars, opportunists, thieves and, yes, legitimate, altruistic charities. I want to contribute responsibly to charitable causes when I can. Your organization has facilitated and enhanced attainment of that objective."

Image via BigStock
We, here at Charity Navigator, are always touched and motivated when we hear we are having an impact. To the donor that wrote this letter: Thank you for sharing your thoughts! We truly appreciate it.

We get many notes, messages and letters and thank all who reach out to us. We love hearing from our constituents. Please do continue!