The Everyday Philanthropist

CHAPTER 17Overhead Ratios Tell You Nothing About Impact

When a charity tells you that 95% of every dollar goes to the cause, you think that means they don't waste money, right? Wrong. How do you know they're not wasting the 95% they tell you they spend on the cause? That's where all the money goes! That's where they have the biggest chance to waste money! Imagine two soup kitchens, A&B: A tells you 90% goes to the cause, B tells you 70%. You think you should give to A, right? Not so. What if A is serving expired soup from cans, has a rude staff, a kitchen infested with rodents, and only serves 50 people on Fridays? But B has nutritious soup, a friendly staff, and serves thousands every day. The low overhead at A would have have betrayed you.

A close friend of mine just quit her job working with a children's agency because she didn't feel the work she was being given was stimulating for the children. One hundred percent of her salary was allocated as going to the cause. But it wasn't actually helping the cause. You can see how asking how much money goes to the cause doesn't help you to understand the impact of your donation on that cause. You need different questions, like the ...