You Donate to Charity, But How Much Actually Goes to Charity?

AARP Fraud Watch Network provides Americans with the information and tools they need to spot and avoid fraud and scams so they can protect themselves and their families. Additional information is available on the AARP Fraud Watch Network site. The following post by guest writer Denton Gates addresses a common concern of many people who are interested in contributing to a nonprofit but are unsure of the proper safeguards and questions to ask. Mr. Gates, CEO of the nonprofit organization Donate Cars 4 Wishes, is neither affiliated with nor serves as a representative of AARP.

You get them on your answering machine and in your mail box every day: robo calls, telemarketers and mailings – all asking for donations to worthy causes.

Our society is blessed with millions of people who generously support a wide variety of causes across the country. But what if your donation is not benefiting the charity as much as you think it does?

It is an unfortunate truth that donors are sometimes taken advantage of by organizations that take more money for themselves than they give to the charities they claim to support.

I experienced this last year as a member of the Make-A-Wish of Connecticut board of directors.
Based on my knowledge of the car donation business, I knew that Connecticut Make-A-Wish should have been getting a much higher percentage of car-donation proceeds than it was getting from the car donation company MAW was doing business with.

That company -- which was one of the country's biggest vehicle-donation groups -- was giving only 18 percent to 22 percent of the money they were raising to charitable causes, a percentage that later caused the Hartford Courant to call the organization “dubious.”

The Courant reported that donors to the company were led to believe their donations were helping Make-A-Wish. But the bulk of the donations were actually being kept by two for-profit companies owned by the car donation company’s founders.

And because charity donation companies are essentially unregulated, what they were doing is unfortunately legal in most states.

Several months before the Courant story, Make-A-Wish of Connecticut stopped doing business with them, and I formed a new nonprofit called Donate Cars 4 Wishes (dc4w.org) and guaranteed that at least 70 percent of the net proceeds from our sales of donated cars would go directly to the Make-A-Wish Foundation of Connecticut.

We created this new model because we recognize that we have a responsibility not only to the charities we support, but also to those who make donations -- to make sure that as much of their pledges as possible will go to the charity they designate.

It is therefore critical for donors to ask -- before making a donation -- how much of the donation will go where it is intended, and how much will wind up in the pockets of the organizers?

One important factor in deciding to make a donation should be: is the money being used wisely and efficiently? The best way to find out is to comparison shop for charities the way you would for anything else you are spending your money on.

There are several websites, including charitynavigator.org and Guidestar.org that provide information on thousands of organizations and the percentages they return to their charities. People considering making a donation would do well to see how their charity stacks up.  After all, whether you are purchasing goods or services or supporting a charity, you should get what you pay for!

Denton Gates is the CEO of Donate Cars 4 Wishes, a statewide nonprofit organization headquartered in Glastonbury. At least 70 percent of all net proceeds support Make A Wish of Connecticut.