Charity Watchdogs Keep Nonprofits on a Tight Leash

For philanthropic investors, there can be no more dispiriting revelation that the charity to which they have donated money has been misusing it. Last Sunday, 60 Minutes aired a bombshell report that China Asia Institute founder Greg Mortenson fabricated his bestselling memoir Three Cups of Tea, which chronicled his humanitarian efforts building schools in Afghanistan and Pakistan. The book has sold three million copies and Mortenson himself is a popular speaker on the lecture circuit, not to mention an advisor about the region to the military.
Among the 60 Minutes report’s most damaging allegations is that Mortenson spent $1.7 million for his book promotion travels, including on private jets. Jon Krakauer, a former friend and supporter, relayed that one staffer told him that “Greg uses Central Asia Institute as his private ATM machine.”
It is heartening to know that in this challenging economic climate, 64 percent of Millionaire households did not decrease their charitable donations in 2010, according to Spectrem Group research. But the vital question remains: How do you know if the money you donate to a charity is being used for the prescribed purpose?
There are charity watchdogs. Charitywatch.org, an American Institute of Philanthropy website, for example, researches, evaluates and rates nonprofit organizations. Another is Charity Navigator (www.charitynavigator.org), which reviews and rates 453 charities, and offers on its website handy top ten lists, such as “10 Highly-Rated Charities with Low Paid CEOs,” “10 Charities in Deep Financial Trouble,” and “10 Slam Dunk Charities.”
But you can be your own charity watchdog. There are several recommended steps you can take to ensure your charitable dollars are not being misused. Among them:
∙Check with the Better Business Bureau to see if any complaints have been lodged against an organization.
∙Ask if the charity is federal, state or local authorizes.
∙Find out what percentage of each dollar donated goes directly to the people the charity is supposed to be helping.
∙Review the charity’s annual report.
On its website, the AIP also has tips for potential doners that will lessen the risk of their being scammed. These include:
∙Never give to a charity you know nothing about.
∙Do not respond to pressure or emotional appeals.
∙Do not be misled by a charity’s familiar sounding name. Some questionable charities choose a name that closely resembles a more established, nationally known organization.