Whether they purport to help 9/11 widows, disabled veterans or children with terminal diseases, numerous scams involving charities have erupted in recent years.
This troubling trend can make it challenging for philanthropists to ascertain whether a charity is legitimate or phony.
Fortunately, several websites have popped up in recent years to help consumers navigate the sometimes tricky water of charitable giving, including Charity Navigator and GuideStar.
Charity Navigator, which launched in 2002, gets six million site visitors annually. The website has compiled an impressive list of all 1.6 million IRS registered non-profits on its site.
Charity Navigator does extensive research on thousands of charities, breaking down such information as percentage of funds spent on administrative costs, financial health, chief executive officer salary, how transparent it is on its website and IRS forms, whether it has a whistleblower or conflict of interest policy, and more.
The website then assigns charities a star rating, with four being the highest ranking.
Charity Navigator also has a search function, broken down by city, so consumers can check out a charity before donating. Additionally , the site posts a host of “top 10 lists,” including “10 Most Followed Charities,” “10 Inefficient Charities” and “10 Top Notch Charities.”
Charity Navigator announced earlier this year it would add a third criteria to judge charities — results – within the next year. The announcement was not embraced by all charities, such as Doctors Without Borders, which has said it has no way of surveying those it helps in war zones.
Charities take Charity Navigator and GuideStar ratings seriously.
“Those websites do a good job of analyzing the 990 form that charities have to fill out for the IRS,” said Ken Bierman, senior director at the BNY Mellon Corp. and former executive director of The Jewish Federation of Greater Fort Lauderdale. “In today’s world, people have to be very careful who they give their money to. There are a lot of organizations that trade on a name, such as the Make-A-Wish Foundation, and really aren’t affiliated. It’s always buyer beware and caveat emptor.”
When recommending charities to philanthropic-minded clients, Bierman refers them to his top three — United Way, The Jewish Federation and Joe DiMaggio Children’s Hospital Foundation.
Charities in South Florida that get a four-star rating from Charity Navigator include Camillus House, Boys & Girls Club of Miami-Dade, Miami Lighthouse for the Blind and Visually Impaired, the Miami Foundation, Greater Miami Jewish Federation, Goodwill Industries of South Florida, Women of Tomorrow Mentor & Scholarship Program and the Boys & Girls Club of Broward County.
The Boys & Girls Club of Miami-Dade is proud of its rating, said president Alex Rodriguez-Roig.
“It’s an affirmation of the work we do and the good standing of the organization,” he said. “You have to have solid financial standing to continue doing that work. So the rating makes a difference.”
Rodriguez-Roig applauds the mission of Charity Navigator, saying, “I think more than anything that helps the donor. When donors are new to a community, and not sure about a particular charity, they can go to the site and get a good amount of information.”
Still, he has mixed feelings about the upcoming change to the site, which will include results.
“The goal is to give the donor a better profile of the organization, so it makes sense to be able to quantify results,” he said, noting that the Boys & Girls Club of Miami recently completed an impact statement with the same intent in mind.
“However,” he added, “the challenge is determining what constitutes good outcome and bad outcome. Some of our clubs are in really distraught neighborhoods. If 85 percent of the kids in that neighborhood improve their reading through after-school reading programs, and you compare that to Key Biscayne, where that number may be 100 percent, it’s not a fair comparison.”
One result that speaks for itself, however, is the fact that The Boys & Girls Club of Miami serves 8,000 children annually, with various programs during spring break, winter break, teacher work days and summers, as well as after-school programs. The group’s annual budget is $4 million.
The Greater Miami Jewish Federation is also pleased with its four-star rating from Charity Navigator, although president and CEO Jacob Solomon said the website is “only one tool” used by donors to gauge charities.
“I think the rating is important because it gives donors some standard that they can use to help inform their decisions about their charitable giving,” remarked Solomon. “Having said that, it’s one standard, and for the most sophisticated donors, it’s not the most important tool they use to make those decisions.”
Solomon said he appreciates how the site requires charities to maintain up-to-date records on governance and conflict of interest policies, however, “there are pieces that don’t reflect the reality of doing business as a non-profit.”
As for the impending changes measuring results, Solomon called it “a good idea” but said he was adopting a “wait and see” attitude.
“Conceptually I’m very supportive of it,” Solomon said. “But I’m having a hard time imaging how they will measure results when the missions of nonprofits vary so widely. When I think about what we do compared to an art museum or an orchestra or a food bank, it’s hard to imagine standard measures that would fairly represent results across the board.”
The Jewish Federation, meanwhile, is still $2 million below its pre-recession revenue level of about $52 million.
But Paul Keefe, co-founder of Philanthropia, a nonprofit consulting group to non-profits, and president of the Broward chapter of the Association of Fundraising Professionals, recommends donors conduct their own due diligence of a charity before donating. That can include attending a charity’s event, visiting an office, looking at the make-up of the board and even meeting the director.
“I think the best way to learn about a charity is to go to their office,” he said. “Any charity worth its salt will find time to communicate with you. And if you goes to a fundraiser or event, it gives you a chance to size up the charity. You may spot some red flags, such as if the event seems too glitzy.’’
Martin Press, a Fort Lauderdale lawyer who specializes in estate planning, always checks to see if charities are on the IRS tax-exempt list to ensure they are qualified charities. Then he checks the state of Florida’s listings of charities, which display expenses, administrative costs and other information.
Universities are the first pick of clients wanting to donate to charity, Press said, with churches or religious-based charities second and charities dedicated to finding cures for diseases third.
“Many times people will have a charitable intent because they lost a relative to a particular disease,” he noted. “But sometimes, people give to charity to save income tax, the estate tax. We explain that anything that goes to charity is not subject to the estate tax.”