According to an article done by The Wall Street Journal, telemarketers in New York on average keep 62 cents out of every dollar raised. While this story was reported in 2014, this article (and many others) cites the “Pennies for Charity” report of 2012. This report examined 589 campaigns. Out of these campaigns, 459 kept less than half of the raised money. This means 120 campaigns kept more than half of the money raised. Overall, telemarketers kept $159 million out of the $249 million dollars raised in New York. According to the New York Attorney General a mere 37.62% of money raised reaches the charity . The trend of keeping money in philanthropic giving is alarming and The Giving Tree aims to bring change to these situations.

There are a few things to keep in mind when critiquing telemarketers for charity. First off, it is important to be cognizant that these telemarketers draw a salary, and therefore, drains a portion of the donation. Secondly, Naomi Levine (executive director of the George H. Heyman Jr. Center for Philanthropy and Fundraising at New York University) said that charities tend to use telemarketers to expand their donor base rather than actually raise money. While there may be explanations to some of the trends in telemarketing for charities, it does not make the actions acceptable.

New York Attorney General Eric Schneiderman is quoted saying, “New Yorkers who open their hearts and wallets deserve to know how their hard-earned dollars are being spent and how much of their money is going to pay telemarketers’ salaries and costs”. I couldn’t agree more.  The real issue here is a lack of transparency. I find it hard to believe that the telemarketers are telling the donor just how much of the money they are giving is actually going to the specified charity. When these important details are being left out of the picture, donors are virtually being lied to and manipulated. This is the opposite of the manner in which a person’s generosity should be treated.

The Huffington Post reported that since this investigation the NY Attorney Generals office has shut down three charities and a fundraiser. Schneiderman’s efforts are commendable. Hopefully, he will be an example for other Attorney General’s offices to make similar changes. Were you aware of just how much money telemarketers keep? After reading this post are you less likely to donate to charities through telemarketing?

 

 

Evidence-Based Giving

We all want a bang for our buck. When it comes to charities, people are even more serious about their money. Farhad Manjoo, a columnist with the Wall Street Journal, reported on GiveWell. Holden Karnogsky and Elie Hassenfeld gave up their hedge fund analyst jobs in order to create a company to properly review charities.  GiveWell reviews charities similarly to the way a company’s stock is reviewed.  This 11 person full-time staff evaluates individual charities and reports what you will get for the money you give. Manjoo refers to this type of giving as “evidence-based giving”.  According to Bloomberg Businessweek, these organizations are analyzed through evidence of effectiveness, need for funding, transparency, and self-monitoring.  After the researchers are done with their analysis, they recommend a mere 2% of the organizations.

In a digital age, we don’t do much without first doing research. GiveWell is making charitable research that much easier. For example, you can treat a child in Africa with deworming medication for one dollar. On the other hand, if you want to make an impact on a westernized child’s schooling, then you would need to give between $10,000 and $20,000. This information empowers people to make better-informed decisions when giving to charity. A potential donor will also know the exact amount of money they need to give to make an impact on. Overall, you will get a better bang for your buck.

Another resource GiveWell offers is recommending charities to potential donors. These recommendations tend to be geared toward smaller charities in foreign countries in which most are not familiar. They outline the best charities they see and offer their audience efficiency in their decision-making. GiveWell also outlines their top three choices in charity. These are three organizations doing the best with the money they have received in the minds of the GiveWell researchers. These recommendations allow potential donors to either make a quick decision with the top 3 list, or go more into depth with the specific recommendations. GiveWell has disrupted the charitable industry and has brought a new way to research charities.

Would you be more inclined to give to a charity that has secured a GiveWell Recommendation?

In the future, would you be inclined to use GiveWell or a source similar to GiveWell?