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HSFPP Update # 199—How Much of Your Charitable Contributions Go Where You Intend?

Message from Flashman: One of our goals in developing these financial lessons is to expose teens to print and Internet resources that will help them make wiser choices. As you probably realize if you think about it, most teenagers do not think about fraud, perhaps especially as it relates to charities.

Under Kentucky law, professional solicitors are required to tell you when they call that they are paid fundraisers. Solicitors often ignore this law, so it is up to consumers to ask if they are working directly for the charity or for a professional fundraising organization. Solicitors are also required to tell you what percentage of the money you give will end up with the charity and how much goes toward fundraising costs, but only if you ask.

 

Message from De’ja Hall: I saw this story on the editorial page of the February 8, 2008, New York Times and thought it would make a good financial lesson. Before teenagers or parents give, however, they should ask themselves if they really want to give to a charity that spends 75% of donated funds on fundraising and administrative costs. I believe this lesson will be an eye-opener for teenagers.

 

Academic Expectations:

Academic Expectation 2.13
Students understand and appropriately use statistics and probability.
Unit 2-6

Academic Expectation 2.18
Students understand economic principles and are able to make economic decisions that have consequences in daily living.
Unit 2-6

Academic Expectation 1.2
Students make sense of the variety of materials they read.
Unit 1-7

Academic Expectation 2.30
Students evaluate consumer products and services and make effective consumer decisions.
Unit 5

 

Web Site Picks of the Week:

http://www.skepticism.org/politics/lib_charities.shtml

http://www.seniormag.com/legal/charity-scams.htm

http://www.charitynavigator.org/

 

In the New$.... How Can a Charitable Organization Direct Little of Their Donated Money Toward Helping the People They Are Supposed to Help?

by De’ja Hall, a UK student majoring in Family & Consumer Sciences

I was reading the New York Times editorial for February 8, 2008—titled “An Intolerable Fraud”—which highlights the need for consumers to be sure they know where their charitable contributions go. The editorial calls readers’ attention to some charitable organizations you might not want to bother with.

They mention an interview with the founder of the Coalition to Salute America’s Heroes and Help Hospitalized Veterans, a legal charity that “raised more than $168 million from 2004 to 2006, but spent only a pittance—about 25 percent—to help veterans. The rest, nearly $125 million, went to fund-raising, administrative expenses, fat salaries and perks.” And the troops overseas got $18.8 million worth of “charitable” phone cards that couldn’t be used to call their families, but only to call a U.S. business that sells sports scores.

I was shocked to learn that, in Kentucky, there are no laws regulating the percentage of money charities spend on overhead and fundraising or how much must actually go toward the cause, and this also was true in most other states I checked out.

In one of my classes in UK’s Department of Family Studies, I remember seeing Web sites that evaluate and rank charitable organizations. The first one I selected was the American Institute of Philanthropy, whose report suggests that 20 of the 29 military charities studied were managing their resources poorly.

Their top-rated veterans’ charities are the following:

VETERANS & MILITARY
Armed Services YMCA of the USA	703-313-9600		A–
Fisher House Foundation	888-294-8560		A+
Intrepid Fallen Heroes Fund	800-340-4376		A+
National Military Family Association	800-260-0218		A

 
Since I work with Dr. Flashman on these financial lessons, I asked him whether the Kentucky Cooperative Extension Service has a publication on charitable giving; he gave me the publication, “Making Your Charitable Giving Go Farther,” which he wrote.

In that publication I came across another important free resource for looking up charities: Charitable Choices. Their Web site, http://www.charitablechoices.org, includes “the inspiring stories of 300+ charities, all of which have met the combined Federal Campaign’s 10 accountability standards, including low overhead.”

Being a smart consumer means making sure you do not waste your money donating to charities that do not spend at least 80 percent of donated money on the people they say they are helping. Any charity worth your while should receive a grade of at least an A- from the American Institute of Philanthropy.

Sources: (1) “An Intolerable Fraud” [Editorial], New York Times, 2/08/08.

(2) “Making Your Charitable Giving Go Farther,” by Robert H. Flashman, Ph.D., University of Kentucky Cooperative Extension Service. http://www.ca.uky.edu/hes/fcs/FACTSHTS/FAM-RHF-124a.pdf

 

Discussion Questions:

1.) Did you realize that an organization collecting money for charitable purposes might not be the charity itself and might not give as much as you think they should to that charity?

___ Yes  ___ No

 

2.) Did you realize that many actual charitable organizations spend much of the money donated to them on fundraising, staff pay, and high salaries and perks for their executives?

___ Yes  ___ No

 

3a.) After reading this article, would you be more likely to check out a charity before giving money to them?

___ Yes  ___ No. Give reasons.

3b.) Or would you be more likely to throw up your hands and not give to charity at all?

___ Yes  ___ No. Give reasons.

 

4a.) Do you think it is important for society that people give money to charity?

___ Yes  ___ No. Give reasons.

4b.) Do you think it is important for people to give to others?

___ Yes  ___ No. Give reasons.

 

5a.) Do you think that government can or should be expected to provide for all of its citizens’ needs?

___ Yes  ___ No. Give reasons.

5b.) Do you think that government can or should be expected to provide for some of its citizens’ needs?

___ Yes  ___ No. Give reasons.

5c.) What are some of the needs that you think the federal government should provide for? And what about state and local governments? What should they do?

 

6a.) Should there be a law in Kentucky mandating that all charities must spend at least 80% of donated funds on its actual mission, rather than on fundraising and salaries?

___ Yes  ___ No

6b.) What about a federal law doing the same thing nationwide?

___ Yes  ___ No

 

Follow-Up Activity:

Allow teens to select and research a charity that interests them. They should ask themselves certain questions about the organization they chose and then report their findings in class.

Questions they need to ask about their charity are to be found on the following page of Charity Navigator’s Web site: http://www.charitynavigator.org/index.cfm?bay=content.view&cpid=385

 

Kentucky High School Financial Planning Program

http://www.ca.uky.edu/fcs/hsfp

The purpose of the HSFPP financial updates, video lessons, and Web site is to assist county Extension agents, credit union educators, high school teachers, and parents who home school their teenagers so that they may improve the economic well-being of our teenagers; and also to show educators how the HSFPP, updates, and video lessons meet Kentucky core concepts. The Web site, updates, and video lessons are provided by the University of Kentucky Cooperative Extension Service, and are free to all educators. The list of core concepts and order form for free program materials including the student guide and instructors manual can be found on the Kentucky HSFPP home page.

If you are not already on our listserv:

The video lessons are available only to members of our listserv and will not be posted to the HSFPP Web site because of the timeliness of the information. If you would like to receive our video lessons, which are sent to our listserv biweekly, on alternate weeks from these updates, please sign up at the following page of our Web site: http://www.ca.uky.edu/fcs/HSFP/response.htm.