Charitable Giving At Work May Rob Your Charities
Author: Nick
Category: Money
Topics: gifts, work
You may be an employee of one of the thousands of companies throughout the United States which organizes workplace charitable giving campaigns—company-sponsored fund drives designed to encourage employees to donate their own money to various worthwhile charities. These campaigns come in many varieties, including charity-specific efforts (where all donations go to one charity, such as the United Way) as well as so-called “charity of your choosing” campaigns where employees can choose from many listed charities or write in their own.
For businesses, the purpose of these campaigns is two-fold. First and foremost, it allows a business to demonstrate its genuinely philanthropic side. Second, it gets them some good press. If your business can brag that its employees donated millions of dollars of their own money to charities last year, you’re going to score some free publicity one way or another. At the very least, you’ll get people to forget for 30 seconds that your company makes death-bringer missiles or cons people into buying houses they can’t afford.
For employees—those who do the actual giving—as well as those on the receiving end of contributions, workplace giving campaigns bring two benefits. One, they actively encourage and remind employees to give a little bit back to their communities. Two, some employers will provide matching funds for their workers’ charitable contributions during annual campaigns. A few employers will even match every employee charitable dollar with two more dollars! Wow! And even if they don’t match your funds, most employers will cover the administrative costs of running the charity drive. Giving through your workplace must always be a no-brainer decision then, right?
Well, not quite.
You see, there’s something your boss won’t necessarily tell you about your company’s annual charity campaign. While your company will always loudly and proudly trumpet the facts that they either provide matching funds or cover the costs of running the fundraiser, some companies neither match donations nor cover the administrative costs. But since those operating the charity campaign (either employees at the company or, more and more often these days, an outside vendor) have to get paid, and it costs a good bit of money just to make everyone in your company aware of the campaign, there are always administrative costs. And if the company isn’t paying those costs, who is? That’s right… you and your charities.
I was startled to learn this year that my own employer is no longer covering the administrative costs of its annual “charity of your choosing” campaign. This wouldn’t necessarily be so bad if they provided matching funds, but they’ve never done that. In past years, all materials advertising the campaign were sure to note that the “company covers all costs of running the campaign.” When I didn’t see that writing on their campaign literature this year, I had to poke a little harder to find a new statement in its place: “95% of your contributions go straight to the charity of your choice.”
“Whoa whoa whoa,” I said out loud in my office. I was shocked to learn that the company would be quietly shaving off almost 5% off every charitable dollar that passes through its campaign in order to cover the costs of its materials as well as paying the third party charity payment processor, America’s Charities.
This was the first year I decided not to participate in my employer’s charity campaign. Instead, I just went to my favorite charity’s website, found their mailing address, and sent them a check. Bam. The charity gets 100% of its money, I feel 100% better about myself, and my company sends me 83 reminder e-mails urging me to donate through them.
While I find it reprehensible that a company would skim from charitable donations to pay its own costs, I will admit that charities still stand to benefit more than they would without these campaigns. Because many people will only give if prompted to by their employers’ annual charity drives, the charities will get more money than if those employees didn’t donate at all. Indeed, 95% is still much greater than 0%. That said, I hope that anyone who bothered to read through the fine print of the campaign saw the 95% warning and decided to send their donation straight to their charity instead.
If you want to make sure your workplace charitable contributions are helping the people who need it most, follow these simple steps:
- Research your charity first. Just because your company offers a list of thousands of “worthy” charities doesn’t mean those charities all make the best use of your money. Use the Charity Navigator website to determine just how much of your charity’s money is put to use directly helping others. Or just donate to my favorite charity, The Save the Idiot Personal Finance Writer His Own Sense of Self-Righteousness Fund.
- Check for company matching funds. If your company will match your donations to a charity of interest to you given through their campaign, you should pump as much money as you can spare through your employer. This way, you’re helping your charity even more than you could just by yourself.
- Find out who pays the fees. Even without matching funds, a company that sends 100% of its fund drive donations straight to the charities is still worthy of recognition. In this case, whether you give through the company or not is your choice; it may just be easier to do it through your employer as it may offer features such as payroll deductions to spread your donation pledge throughout the year.
- Whatever you do, just give. If your company is like mine and takes even a dime of that charity money for its own costs, just write a check and send it straight to your charity instead. (Try not to pay by credit card, as up to 2% of your donation may end up going to the card processing company instead.) They’ll get the full benefit, and you’ll be telling your company that you won’t stand for its dipping into donations to cover administrative costs.
And of course, don’t forget to take the tax deduction to which you’re entitled for eligible charitable donations; there’s no point in giving the government a free donation too when it already funds itself quite well out of your paycheck each week.
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28 Responses »
1.
s. jennifer rose
October 23rd, 2008 at 8:29 pm
Hate to be a buzzkill, but there is a huge inaccuracy in your pie chart. I’m a Vice-President and board member on a non-profit (unpaid positions), and no donations through a 501(c)3 charitable non-profit can be used for things like lobbying. Organizations, like Planned Parenthood, for example, have a completely separate arm/organization for their lobbying and campaigning because those contributions are NOT tax deductible. But perhaps that’s what the 15% bribes section you have is for…
2.
Niccolo Svengali
October 24th, 2008 at 12:32 pm
It _would_ be interesting to know how much money actually goes to the people a charity is ostensibly set up for.
I say donate to well-known charities run by Catholic religious; they’re less likely to skim, and if they do, they’ll look darn suspicious moving around large sums of cash, or driving a Ferrari!
3.
MoneyMateKate
October 25th, 2008 at 12:03 am
I don’t donate through PayPal if I can avoid it (2.9% + 30 cents, plus any credit card fee if you charge it), and Network For Good is even worse at 4.75%. If you’re donating more than $10, it’s totally worth the stamp and envelope.
I also pick super-tiny charities run by the person who started it, who puts their heart and soul into their cause. I don’t even care if they’re registered - that creates a disproportionate expense for the little guys. And their solutions are often creative and customized. I have a separate blog for sorting out my thoughts on this - cheapcharity.blogspot.com
4.
stocks
October 25th, 2008 at 8:06 pm
I’m not quite sure how I feel about it, as when a company I work for has a drive to collect contributions, I feel uncomfortable being solicited at work, but am more then willing to do it outside of work. I’m still up in the air about it though..
5.
PA CPA
October 25th, 2008 at 8:52 pm
Something to keep in mind if you want to “look into” a charity’s spending habits is to see if they post a copy of their Form 990 on their website or if Guidestar (www.guidestar.org) has them listed with a recent year’s filing (I believe to get the “current” one you have to sign up for the “premium service,” but there is a “basic” service portion that is free with up to 3 recent years).
While a 990 isn’t always 100% clear there should be enough detail on the first 3 pages to get a good idea of confirming you’re not giving to the charity from the comic.
6.
Jordans
October 25th, 2008 at 10:42 pm
When I donate my money to a charity, i make sure it says in fine print, “100% proceeds donated”
7.
Kyle
October 27th, 2008 at 11:13 am
Also, not all charities are created equal. Some have huge overhead costs (Red Cross) and some don’t (usually the smaller ones). The Red Cross is a valuable charity so I’m not saying you shouldn’t donate there, but if you really want to make sure more of your money is going to help those in need, stick to the smaller charities. Or just donate your time.
8.
Kim McGrigg
October 27th, 2008 at 5:16 pm
Great post. I’d like to add a few things for consideration:
-According to a study by Charity Navigator, special events are an extremely inefficient way for charities to raise contributions.
-According to SmartMoney.com, it is smart to give a larger sum to one charity instead of splitting the money—it can mean the difference between making a contribution and fully funding a project.
My goal for 2009 is to identify one or two causes that are important to my family and concentrate my giving.
9.
vev from patio furniture
October 28th, 2008 at 6:36 am
Interesting post! Sometimes, it’s nice to know that the donations who have given were really going to help those in need.
10.
JimmyDaGeek
October 28th, 2008 at 7:27 am
I always spend the time to find an address and use my online bill pay to send a check to my charities. I also use the bill pay to automatically send periodic payments so I don’t need to use payroll deduction. I don’t use credit cards because of the 3% or more they take off the top.
11.
Jeff
October 28th, 2008 at 8:55 am
I actually just started sponsoring a kid through the charity called World Vision. It’s a Christian organization that uses the money to better communities that are extremely poverty ridden. 80% of the donations go strait into these third world communities.
The thing that I like about World Vision is that the donation not only helps the child, but the whole community. Sponsoring one child could mean a well for the entire village or some new farming equipment that everyone will benefit from in the long run. I also checked it out on that Charity Navigator site you linked to and they gave it 4 stars.
12.
Yinna
October 28th, 2008 at 10:32 am
I just checked - United Way St Louis shaves off 9%, and since they only redistribute the money, some percentage of the remaining dollar amount will go to overhead of the charities that benefit. My employer does not match or cover any costs, so I just sent a complaint. Thanks for pointing this out Nick, and I’ll go find a charity of my own.
13.
stocks
October 28th, 2008 at 10:39 pm
One way to help out is to also give some time freely, that can always help out, especially during the holidays when shelters get busier..
food for thought.
14.
Jerry
November 1st, 2008 at 2:24 pm
I stopped contributing to the workplace charities a long time ago because I discovered that too much of my money was going to the wrong places and people. So now I give to my charity of my choice by writing a check right to that charity, and that eliminates the middleman completely.
15.
shadox
November 1st, 2008 at 6:44 pm
The problem is that many charities themselves spend a large percentage of the contributions they receive on administrative costs, and only a small portion actual goes to support the cause itself. luckily, there are many resources online to help you find charities that minimize such administrative costs.
16.
stocks
November 1st, 2008 at 7:46 pm
How about giving away items to goodwill or the local shelters? That has to keep the money out of the organization, but still help others out.
17.
Myron Tay
November 3rd, 2008 at 10:58 pm
All the more reasons not to donate to charity organizations - Being cynical has its payoffs.
18.
Firstwebsearch
November 7th, 2008 at 3:52 pm
We recently donated some plasma TVs and PS3’s to the children’s ward of a local hospital. It was pretty satisfying and I think the people we tried to help will get good use of it.
19.
Andrew
November 7th, 2008 at 8:13 pm
I was stopped at a light today, when a guy approached me with a bucket wanting me to donate for children in need. Don’t get me wrong, I want to help people out, but come on, how do I know it’s not just going in their pockets?
20.
Pool
November 13th, 2008 at 12:51 am
Yes many a times the money does not go where we think it is going; but because of that doesn’t mean we stop giving. Before we commit to give, we can get information about the work they do. There are a lot of organizations that work very sincerely. We need to find such organizations and give liberally to them.
21.
CheapBastid
November 20th, 2008 at 4:41 pm
I prefer to donate my time instead of money these days that way I know 100% of what I donate goes to benefit the charity, and, as far as I know, I have no administrative cost..
22.
AirJordans
November 21st, 2008 at 5:44 pm
Donating through your work is best only if they match the funds. Most employees would ordinarily think the company paid the expenses from their own money. I stick with Salvation Army or Red Cross, I’m in US. Once after Katrina I donated piggy back on a relative who’s company matched all funds donated. It seemed smart.
23.
Jessie
November 27th, 2008 at 7:34 am
Give Well, Give Wisely. Measure the charity effectiveness more than the money. Investing, research and planning are crucial if you want to see your donations put to the best possible use. Basically, it turns out that investing well and giving wisely aren’t all that unusual. Just as it’s important to track your investment portfolio and rebalance your assets, it’s important to keep an eye on the group to which you donate money.
24.
Michelle
November 30th, 2008 at 9:16 am
Totally agree with your cynisism. I just think that seeing as you always have to go through one intermediary, the charity organizers, to help people in need, why go through your company too? It’s just more risk of more of your money going to administrative or publicity costs.
25.
Ray Ban Sunglasses
December 5th, 2008 at 12:02 pm
For the entire month of November we have a change drive for prostate cancer research and I just gave all the change I had. All the depts. were supposed to gather change. I never even thought about what other costs there might be. I wonder how much actually went to fix this disease and how much went to administrative costs. From now on I am gonna make sure I know how much of my money goes where. Thanks for this informative post.
26.
Brian
December 5th, 2008 at 11:26 pm
A couple points:
My local United Way ’shaves’ about 10% of donations for admin costs, but their costs are lower than any of the many charities that they distribute to. More importantly, the United Way also stipulates that all donations go directly to aid programs, not additional admin expenses or capital projects.
So, writing a check directly to a charity might mean that you are financing their own 25% overhead costs, government lobbying efforts, advertising campaigns, new offices, etc rather than helping the needy.
And, almost never donate to anyone that calls your house. Those are usually third party telemarketers that skim huge portions of any donations they arrange.
Be especailly cautious of any mail-in offers. I’ve seen legitimate looking request from phishing-style organizations such as the ‘American Cancer Association’ and ‘American Heart Society’ that sound a lot like the respective ‘legit’ charities, but aren’t. Looking them up on the web or reading the fine print often results in claims that 95% of their collections go to the cause, often via ‘educational materials’. What that really means is that they pay someone’s brother-in-law’s printing company to make up those free return address labels with a message on the back that says ‘have annual cancer screenings’.
You might as well throw your money out the window than give to these frauds.
Give, but give smart.
27.
WriterGig
December 15th, 2008 at 2:21 pm
Somehow I think your pie chart is closer to the truth than many charities would have us believe … but some are truly low-overhead and I look for those when donating.
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