Tuesday, December 5, 2006

Watch where your donations go

An item this morning on the regional news of CBC Radio One brought back some bad memories. Last week the Mayor of Stratford, Dan Mathieson, went on the air and encouraged people to give money -- as much as a day's pay -- to a charity called Pediatric AIDS Canada. No sooner than he made that announcement than he started getting flooded with complaints about the group. We in Hamilton are all too familiar with this one, a not-for-profit group that in the past has been investigated by the local press for spending way more on administration than on actually purchasing anti-viral drugs for kids. Besides, I thought our health care system took care of such catastrophic drug costs already. So this morning, the mayor pulled his support and said he needs to do more research.

He had better. For at one point in my life, I was unwittingly part of such a scam. Desperate for a summer job in high school, any summer job, I went to work for this little firm called Great West Entertainment -- GWE -- and got a job in their boiler room, raising money for any of a number of charities. I was so burned out doing futile cold calls to people who normally hang up right away (one had to meet a quota at that level in order to be eligible to call people who actually donate on a regular basis to various groups), that I quit within a week and a half. And this was in the days when call centres used handsets and wrote everything on paper, not the kind I work at now where it's mostly paperless and hands-free. Imagine my shock and anger when I later found out -- thanks to an investigation by CBC's Marketplace -- that my former employer and its then main competitor (can't remember which one) often took a commission of 60% right off the top for its services. The claim was made by the executives that ran them, that they were entitled to it since they were doing a job that smaller charities -- say Big Brothers or the Wheelchair Basketball Association -- couldn't do or be bothered to do.

Which really bothered me, and for this reason: If the consulting firm was collecting a fee of 60%, that only meant 40% was going to the charity. And they have their bills to pay too -- utilities, food and lodging, etc. So when all was said and done, they maybe were left with a quarter or even less if that.

So if I had a hundred bucks at the end of the year and I wanted to make a donation, where do I send it? To a smaller group who has to rely on these big guys, even in the age of the Internet when it's much cheaper to run a secure on-line site? To an established group like the Sally Anns or the Red Cross? Both of those generate a tax receipt but in my bracket I only get back barely 21 cents on the dollar. If it was just those two choices, I'd rather give it to the bigger groups who keep their administration costs down so I know my donation goes to those in the greatest need.

Then there's the third choice, making a political contribution. On donations up to $400, the rebate come the new year is 75%. Doesn't take a genius to figure out which one's the best one from a tax standpoint.

Even if I just decided to go the altrusitic route, it's a good idea to do some research. Ask some tough questions. If they spend more than 25% on administration year after year, then you have to wonder whether it's a group that has just registered as a charity to avoid paying taxes. It's also worth (as well as a bit of work) checking into the lifestyle of those who run such groups. One can't exactly expect such leaders to live on the street, of course, but if their travel is anything above business class and for anything other than work specific to the group (think, for example, of Benny Hinn's "layovers") then look somewhere else to donate.

It's the end of the year, the time for the greatest need. The last thing we need is people being exploited for selfish reasons. So watch where your donations go. And another thing: If you see those donation boxes or kettles, ask if there's a toll free number or website -- then make your donation directly so you actually get a receipt. Screw Stephen Harper and Dalton McGuinty for once and keep at least some of that pledge in your pocket.

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