We like to think of philanthropy as pure altruism… making a gift, and it often is, but philanthropy also has its dark side.
Criminal theft and deception
Among the darkest is that there are charities legally registered as nonprofits that are merely scams collecting money for owners and sponsors.
Charity Watch, the charity rating service of the American Institute of Philanthropy (AIP), is as close to an independent charity-rating service as donors will find. They do most of their own analytical research (as opposed to charity-supplied data) on nonprofits seeking your charitable dollars. Charities are rated on the percent of their overall income they spend on programs, on fundraising, and on management (i.e. how much they spend on executive compensation and overhead), how much they spend to raise $100, as well as the size of their unspent reserves.
But even then, Charity Watch’s analyses are limited somewhat by their use of comparative financial ratios derived mostly from 990 and tax filings. There’s little or no direct research on factors such as effective delivery-on-mission, a more difficult process to quantify.
Then there are the real scam charities, the lion’s share of which are associated with causes that elicit deep and immediate human empathy. Breast cancer leads the pack. Professor Mara Einstein’s book Compassion, Inc. explains why “breast cancer,” aimed at…
