Monday, January 6, 2014

Changing the way nonprofits ask for money...

You may have heard about the untimely demise of the Fast and Furious actor Paul Walker recently. Paul died in a horrific car crash after returning from an event related to his nonprofit organization Reach Out WorldWide.

From what I read online Paul was a great guy -- he anonymously paid for engagement ring for a war veteran and then founding Reach Out Worldwide to help people that have been affected with a natural disaster. I was moved by his efforts and was about to donate money to his charity when I came across following statistic -- only 35 cents on the dollar goes towards the cause; the rest is spent on administrative expenses and fund raising efforts. Now that didn't sit well with me. 

I suppose most people will like to donate their money to organizations where majority of the money  (preferably at least 75 cents on the dollar) towards the cause. I spent time on charity navigator to find this number for popular nonprofits that we know of and here are the results:

Charity Name                                      % of Funds going to Programs
American Red Cross                               90.7%
Livestrong Foundation                            83.5%
The Leukemia & Lymphoma Society     73%
St. Judes Children's Research Hospital   70%

Reach Out WorldWide was not covered on charity navigator as of the date of publishing this blog.

If I were to guess, most if not all people do not look at such metric before donating their money.

I would like to propose a new law where any nonprofit trying to raise money online or otherwise is required to indicate roughly how much of the donation will be spent towards the cause. By doing this, the donor becomes more informed and a good side affect will be that the donation money will be channeled more towards efficient organizations.


1 comment:

Anonymous said...

Interesting. I did similar research 2 years ago..would be good to talk sometime..we r connected on linkedin.

Amit arora