The ice bucket challenge is taking the Internet by storm, raising millions for the ALS Association, and now, the backlash has begun. Some critics think the challenge itself harms other charities, others are criticizing the particular choice of meme, some are opposed to the use of primates in ALS research and others have finally looked around the ALS Association’s financial reports, and they’re shocked and upset to learn that the group only spends 28% of its budget on research.
For those who think that their donations are going largely to funding the work that will create a world without ALS, that sounds like a ripoff, and some are getting angry about it.
However, the real scoop here is more complicated, and it’s important to understand both the individual situation with the ALS Association, and the larger issue of funding for charities. Let’s tackle charity funding first.
By law, accredited charities must make their financial information public. Many publish this information on their websites in addition to an annual report which anyone can view. The documentation contains a variety of information about revenue sources, how the budget is applied, and what kinds of goals the charity is setting and meeting. Responsible charities tend to go above and beyond when it comes to making sure their legal obligations are met, ensuring that their financials answer any potential questions.
If you want to know how a charity is using its funds, you can go directly to its reported data. You can also use a service like Charity Navigator or the Better Business Bureau to look up the charity of interest and check out its efficiency rating and other data. These services look at reported financials and complaints to rank charities, helping people select charities on the basis of efficiency.
Ideally, all of a charity’s budget would go to supporting its mission, of course. However, that’s not logistically possible. Charities need to spend some money on fundraising to generate more funds for their work, and they need to spend money on staff and facilities overhead, including executive salaries. Some charities go over the top with their executive salaries — others try to keep them more reasonable. It can be tough to strike a balance between not wasting the budget and hiring the right people. Good administrators bring in funds, make the charity more successful and create a positive, dynamic workplace. Poor administrators may be less expensive to hire, but less effective, too.
Red flags when it comes to donating include excessive funds spent on fundraising and overhead, but also an unclear mission. If what a charity does isn’t crystal-clear, how do you know where your funds are being directed? If a charity’s work is split between several different services (like rehoming orphaned animals and lobbying legislators for tougher animal protection laws), how is it balancing its resources between those different goals?
Now that you have a brief primer on evaluating charities, take a look at the ALS Association. Start with their mission:
“The ALS Association is the only national non-profit organization fighting Lou Gehrig’s Disease on every front. By leading the way in global research, providing assistance for people with ALS through a nationwide network of chapters, coordinating multidisciplinary care through certified clinical care centers, and fostering government partnerships, The Association builds hope and enhances quality of life while aggressively searching for new treatments and a cure.”
The organization’s mission, in other words, is not just about researching and curing ALS, contrary to what many expect. It’s also about direct service for patients and family members in need, and clinician training to improve quality of care and help people understand ALS more effectively. Thus, the organization needs to split its funds wisely between these missions.
What about their financials? Their annual report is accessible online, but the association also provides a handy pie chart breaking down rough information about how they use their funds. Out of the budget, 28% goes to research, 19% to direct services, and 32% to public and professional education. That’s 79% of funds that go directly to support the organization’s mission, backed by 21% of funds dedicated to fundraising and administration, which is actually a reasonable and efficient margin when compared to many other charities.
Viewing this information provides much more context about how the organization uses donations, and illustrates that the group’s budget isn’t a shocker, and that 28% number isn’t as bad as it sounds. If 72% of the association’s funds were being eaten up by fundraising and administrative expenses, that would be a problem — and that’s how many stories about the ALS Association’s budget are being presented. But that’s not the true story, as even a casual glance at the charity’s real budget breakdown will show.
The bottom line: When it comes to charities, don’t believe the hype. Always check for yourself before donating to or recommending a charity, and when someone tells you something about a charity, get it straight from the horse’s mouth, not the rumor mill!
Photo credit: Anthony Quintano.