Rating the Performance of Charities

Daniel Borochoff, president of the American Institute of Philanthropy, tells Scott Simon about the organization's Charity Rating Guide and Watchdog Report. It grades charities based on their financial performance and accountability.

Copyright © 2005 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

SCOTT SIMON, host:

By all accounts, Americans are extraordinarily generous when it comes to helping people in need and causes worthy of support. Individuals, corporations and foundations in the United States donate billions of dollars each year to charity, but some charities have more value than others. And there are also some outright frauds. At the end of this year, which saw so many give so much for the relief of earthquake, tsunami and hurricane victims, seems a good time to talk to the American Institute of Philanthropy, which publishes quarterly ratings of how well and honestly charities spend the money they receive. Daniel Borochoff is the president, and he joins us from our studios in Chicago.

Thanks very much for being with us.

Mr. DANIEL BOROCHOFF (President, American Institute of Philanthropy): Yes, my pleasure to be here.

SIMON: And how do you rate a charity from A to F?

Mr. BOROCHOFF: We do an evaluation of the financial performance and accountability. We don't just pass along whatever the charity says because the charity, when their hand out asking you for their money, they're going to make themselves look as good as they can. So we actually tell you how they're spending your money. And a lot of times what they say is a program isn't at all what you think is a program. So we will sort out all that and give you a letter grade rating, A plus and F, just like in school.

SIMON: Recognizing that this might make a difference to people this year, just arbitrarily, could you spotlight some of the groups that earned an A?

Mr. BOROCHOFF: Alaskan Conservation Foundation, the Epilepsy Foundation, Juvenile Diabetes Research Foundation, Human Rights First.

SIMON: American Red Cross gets an A?

Mr. BOROCHOFF: They received an A minus. They get about 90 percent of programs the cost to raise a hundred dollars is about 22 dollars. It should be better with what they raise for Katrina and Rita. And it's quite a bit. It's 65 percent of the 3 billion raised, so they're coming in at getting around $2 billion.

SIMON: YMCAs and YWCAs also earn an A.

Mr. BOROCHOFF: They manage to get most of their money towards program services and not spend too much money on their fund-raising costs. This is the national office. You would want to look at each local place differently. They don't combine all of their local Ys that are independently operated. So the national office, the national headquarters are run efficiently.

SIMON: All of the regions of the Salvation Army, we'll note, receive A to A minuses. I have to ask you, though, the Christopher Reed Paralysis Foundation, a name that's so important to people, gets a C minus. Why is that?

Mr. BOROCHOFF: Well, they have not been doing quite as well as they could with raising money. You would think that something as popular as that cause would be able to do better, but, you know, they're just not being as efficient as they really could be. Hopefully, they'll improve and, you know, now that their founder has passed, they've got some, you know, reorganizing and they're going to have to be, you know, doing things a little differently now.

SIMON: All right. I want to mention some of the F's, and one of the first things that strikes you is that a lot of the F's have very appealing, compelling names, like the International Children's Fund or Feed the Children. I mean, who wouldn't want to give money to a group called Feed the Children.

Mr. BOROCHOFF: Certainly, but they only spend 18 percent of the cash you give them on program services; 60 percent of the money goes for mailings and infomercials on television. It's not a financially efficient organization. There's more articles on charitywatch.org about that particular group. Be careful. Anytime you see the world children, cancer, veterans, police--there's look-alikes. It's easy to get confused, too, so make sure you know the program.

SIMON: Feed the Children could easily be confused by...

Mr. BOROCHOFF: Save the Children, for instance.

SIMON: Exactly, yeah. Save the Children is a very different group.

Mr. BOROCHOFF: Right. Save the Children receives an A grade. They're an incredibly important international relief and development organization, child sponsorship organization that's played a major role in a number of these big disasters that, you know, we've had recently in the past year.

SIMON: Native American Heritage Association and the Native American Rights Fund both get an F in your rankings.

Mr. BOROCHOFF: They spend too much money raising money. They hire outside professional fund-raisers. There's a lot of 90-10 contracts out there. which means the fund-raiser gets to keep 90 percent of the money. So when you're asked to give money, ask who's doing the asking. If its a professional solicitor, on average, only a third of the money is going to make its way to the charity.

SIMON: Forgive me for--I knew there were professional fund-raisers who take a slice of what they raise, but 90 percent is practically the whole pie.

Mr. BOROCHOFF: Well, not only that, some of these groups--they control the mailing list so the charity has no chance of improving because they can't switch fund-raising companies. And also, you can be sure that they don't have that much loyalty to protecting your privacy and your name and they're going to want to trade and sell it to every other charity and business that they can think of or that they have as a client.

SIMON: Is there any way for someone who's sitting at home opening up envelopes or watching late-night appeals on TV with soulful-eyed children in want as to what some of the tell-tale signs would be of a responsible organization and one that's just interested in picking their pockets?

Mr. BOROCHOFF: Be careful because I've heard some stories of them staging operations, finding cute kids with big eyes. I mean, you have to be careful. If it's too emotional, they don't want you to think it through. They're looking for a knee-jerk reaction. So let that inspire you. Let that motivate you, but then ask for some accountability. Look at their Web site, you know, call them up, get an annual report. Find out what they're actually accomplishing in relation to the money they're spending.

SIMON: There's a growing concern among some Americans now that they not donate money to a charity that winds up assisting a terrorist organization.

Mr. BOROCHOFF: Right. The Treasury Department has a lot of new rules now and lists to check before giving. That's why it is easier to go through an American-based non-profit that's following the Treasury Department rules and checking all of the lists. It is risky for yourself to send money right over to an international group or something you see on the Internet because you could be funding a terrorist, so you want to try to avoid that unless you have personal connections, you know, internationally, you really must go through an American group that knows what they're doing.

SIMON: When Americans were donating literally billions of dollars for relief after Hurricane Katrina and Rita, there were people in the field that said, `Look, this is very nice, but we really also have to concentrate on raising money after the emergency is perceived to have passed in long-range sustaining efforts in that region of the country. That's important, too, and often donor interest falls off after the story's out of the headlines. If people want to contribute to those long-range, sustaining efforts, where can their money best be directed?

Mr. BOROCHOFF: Depending on the disaster, but for instance, in the Katrina/Rita disaster, the Red Cross uses the money very quickly for emergency aid and people automatically give to them, but people need to think about the many other great groups out there, and the Salvation Army, for instance, raised $300 million, but they've only spent 100 million because they're going to use the $200 million for longer-term efforts. And actually, with the tsunami, the Red Cross actually only spent about a third of the money they've raised for the tsunami so far. I think they raised more than they would ordinarily do, but people need to look at groups that give some for the emergency needs, but also think about the longer-term needs to get people back up on their feet, because too often we have a big disaster and the Red Cross and some groups swish in and help people with emergency needs and then they're gone and the people are still struggling. And so we gotta think about groups that help in the longer term, and at charitywatch.org for all these disasters we've listed many groups that are helping in many different ways, including scholarship job retraining, relocation of people, so there's a lot of good things you can support.

SIMON: So if I wanted to go into the charity business, would it be best for me to go into the charity business under the name Save Orphan Children or Veterans with Cancer?

Mr. BOROCHOFF: (Laughs) Yeah, you'd probably rake it in. I don't want to encourage anybody, but I cert--the Register of Philanthropy(ph) would definitely be on your back with that one.

SIMON: Well, I thought of it first, OK? Let's get that copyrighted. Daniel Borochoff, president of the American Institute of Philanthropy, speaking with us in Chicago. Thanks very much.

Mr. BOROCHOFF: My pleasure.

SIMON: And to find out how you can visit the AIP Web site and review charities for yourself, you can come to npr.org.

And you're listening to WEEKEND EDITION from NPR News.

Copyright © 2005 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.