We want to make meaningful donations that make an impact on the problem, so all of our potential recipients are reviewed by the Donations Committee. During that process, I’ll call the organization. If the organization is one I don’t have first hand experience with, a phone call gives me a great feel for what they’re like on a personal level. Are they professional? passionate? It also gives me an opportunity to see how well they talk about their organization, their work, and their accomplishments.

My favorite questions to ask are…
• How do you know what you’re doing works?
• What are you planning to accomplish this year?
• How has your organization changed over the years?

These three questions should open the flood gates, and you’ll get all kinds of information and get a good feel for what this organization is like.

Before I call, I’ve reviewed their website, their financials, and googled for any criticisms of their organization. Sometimes, this review will create its own questions.

• Last year, your expenses were significantly higher than the year before. What was that due to?
• I noticed your website hasn’t been updated for eight months. Are activities/accomplishments still happening?

I strongly encourage you to reach out to an organization your considering making a donation to by phone. It really helps me feel more confident about where I’m sending my hard earned dollars.

Be honest…. Have you ever made a donation and didn’t bother to do any research?

Me, too. I haven’t done research because I was too busy, it was too hard, I didn’t know where to look, or I trusted the reputation of the organization. But there are three very real and very bad consequences of making a bad donation.

The Three Risks of Un-researched Donations

1. Your donation is wasted

A few years ago I read an article about an oven made from cardboard boxes that uses solar energy to heat up. It won a climate change award and was touted as a solution for the global problem of deforestation due to the demand for wood for cooking fuel. An organization sprung up to provide these solar ovens to people across the developing world.

Recently, I read an article that suggested that the reason this box hasn’t been widely adopted across the developing world is that it solves a problem no one was looking to solve– how to cook a hot meal in the middle of the hot day. For those people in the developing world who received a free solar oven, it has sat largely unused in the same way something you got as a present but didn’t really want or need sits around your house. Before donating to a project, research needs to be done to discover if the project is solving a problem that people actually want to solve and that people will adopt.

Otherwise, there goes our hard earned money down the toilet.

2. Your donation is embezzled

Greg Mortenson wrote the best selling book “Three Cups of Tea” which detailed his ordeal in Afghanistan that involved him failing to summit K2, getting lost on the way down, and stumbling into a small Afghanistan village. The members of the village nurse him back to health and in return he promises to build them a school. During this time, he was kidnapped by the Taliban and secured his release by asking for a Koran from his captors and promising to build schools across Afghanistan. He went on to found a foundation, Central Asia Institute, that would raise money for building schools across the world. It’s a beautiful story that inspired nearly $60,000,000 in donations over 10 years.

You know where this story his heading, right? You can watch the “60 Minute” expose here: http://www.youtube.com/watch?v=XhAb37yZ0o0 . I’ll summarize what happened. Large parts of his time in Afghanistan are entirely fabricated. He successfully summited K2 with a friend, he did not go to a village, and he was not kidnapped by the Taliban. All of that could possibly have been justified if it resulted in thousands of children receiving an education.

But that didn’t happen either. It turns out that most of the foundation’s spending was for “domestic outreach”– aka travel expenses for Mortenson’s speaking engagements. Although he was selling books and collecting speaking fees during these speaking engagements, the foundation does not receive any of those fees. Worse yet, in 2010, they claimed to have built or supported 141 schools. “60 Minutes” managed to visit 30 of the claimed schools and found that 1/2 were empty, not receiving support from the Central Asia Institute, or entirely non-existent.

Some research would have shown that the Central Asia Institute had only a single audited tax return. A brief review of their 1009 tax forms would have shown exorbitantly high non-program related costs, and some critical thinking would have revealed that the $23,000,000 raised in 2010 built 141 schools at an approximate cost of $163,000/school– a cost that is 10 times more than other non-profits are building schools for.

If the generous people who sent their money to the Central Asia Institute in hopes of educating children had done the necessary research before donating, it’s possible that despite the emotional appeal of Greg Mortenson’s story they would have chosen to support an organization that had fewer red flags, and this appalling situation would not have happened.

3. Your donation hurts the people you want to help

What’s worse than lack of effectiveness or fraud? How about when a project that our money funds ends up harming people? If you’re like me, the thought of a child alone, without his or her parents, trying to take care of themselves is heartbreaking, and you may send money to an orphanage– perhaps one in Haiti to help all the children who have lost their parents in the earthquake.

Our hope would be that these children who have nowhere else to go would receive food, shelter, an education, and an opportunity for a better life. And we wouldn’t be alone. There are over 600 orphanages in Haiti many of which are receiving support from well-intentioned international donors.

Unfortunately, orphanages are a terrible way of providing care to children. One reason for that is that orphanages are good business and children are vulnerable to exploitation. In fact, one couple in China alone sold 85 babies to government run orphanages, which were in turn selling them in international adoptions. According to the article, the Chinese government acknowledges that each year 30,000 to 60,000 children go missing– most of them abducted (http://articles.latimes.com/2010/jan/24/world/la-fg-china-adopt24-2010jan24).

It doesn’t just happen in China, but every place where orphanages pop up. As a result of the profitability of orphanages, many children who are not orphans end up in them. Save the Children, the world’s leading independent children’s rights organization, reports that nearly 40% of children in Zimbabwe orphanages have a living parent, 92% of children in private residential institutions in Sri Lanka had one or both parents living, 70% of children living in institutional care in Azerbaijan have parents, and of their assessment of 49 orphanages in conflict-stricken Liberia, 98% of the children had at least one surviving parent (http://www.savethechildren.org.uk/en/docs/Misguided_Kindness.pdf).

As if that wasn’t bad enough, the body of evidence shows that orphanages are damaging to children. Save the Children’s 34 page report “Keeping Children Out of Harmful Institutions” reviews a large body of scientific studies about children in orphanages documenting their increased risk of abuse, exploitation, disease, their decreased emotionally and intellectual development, and reduced economic and social opportunity. One study of Romanian children found that for every 2.6 months spent in a Romanian orphanage, a child falls behind one month of normal growth, had significantly lower IQs and levels of brain activity, and were far more likely to have social and behavioral abnormalities such as disturbances and delays in social and emotional development, aggressive behavior problems, inattention and hyperactivity, and a syndrome that mimics autism (http://www.savethechildren.org.uk/en/54_9678.htm).

Yikes! We thought we were doing a good thing. Had we done some research into the issue of orphanages and child care, we would have discovered that orphanages are the last possible resort for providing child care and that supporting families to take care of their own children and their relatives children is more effective and cheaper. If we were really committed to supporting orphans, then we would have to do some serious work to find a reliable orphanage truly providing good care for the right reasons.

The Solution

As small donors with jobs, families, and responsibilities, it’s difficult to find the time to do the necessary research before sending money, and yet when we don’t, we risk having our money embezzled, wasted, or hurting people the wish to help. Obviously, research is imperative, and and a giving circle eases the burden of research by sharing it across the members of the giving circle.

This guide will help you through the 4 steps to start your own giving circle or you can join an existing virtual giving circle.

In any case, be sure to treat your small donation like the big deal that it it.

On my Facebook page, I asked, “What is the biggest concern you have about donating money?” The replies I received went something like this:

• How much of my donation goes to those in need?
• How effectively are they using my donation?
• I don’t like losing control over the money we donate.

These are variations of the question, “What happens with my donation?” Does it help people? Is it used effectively? Efficiently?

For a long time, I didn’t feel comfortable answering these questions. For one, I usually donate small amounts of money, and it just felt like too much work to research these questions for $25, $50, or a $100. Secondly, I just didn’t really know where to look or what to ask.

So, I started doing extensive research, so that I could donate confidently. I wanted a system that was easy, accessible, yet thorough. I’m going to share with you how I answer this question, now.

Basic

These are the basic questions that I now answer before I make any donation. I got most of these from Lucy Bernholz, and my favorite part about it is that she designed them for kids. I’m pretty sure that if a fifth grader can answer these questions, then I can, too.

• What does the organization do?
• How do they do it?
• Is it congruent with what I want to support? Why?
• How do they know they are making a difference?

More complete

If I have more time and I want to be more thorough then I’ll answer these questions suggested by Stannard Stockon.

Most non-profits should be trying to put themselves out of business. They should solve the problem they were created to fix, and then happily cease to exist. Our donation should have an impact on the problem, and these questions will help you figure that out.

• On what research or evidence did the organization design its programs?
• What information does the nonprofit collect about the results of its programs?
• How does the organization systematically analyze the information it collects?
• How has the nonprofit adjusted its activities in response to new information?
• Does the organization have an absolute focus on producing results?

Even More Complete

I like to conduct a little reputation research before making a donation. There are many online charity evaluation companies. Each one has strengths and weaknesses, so I don’t depend on any one company. I may not find any information on the organization I’m considering, I may not discover critical information that will come to light later, and I may choose to donate even if I find concerns. But at least I’m making an informed choice.

• What information do on-line sources such as Give Well or Charity Navigator, the National Better Business Bureau or my local BBB provide?
• Google the organizations name with the word “problem”, “concern”, and/or “criticism”. What do you find?

Get Help From Others

I’ve discovered that answering these questions is easier and more effective when I’m sharing the work with the members of my virtual giving circles. So, I encourage you to find others who are also interested in giving to this particular organization or just interested in giving at all and team up. You don’t have to do it all alone.

Contact Me, to see if I can put you in touch with other people who care about the same cause.