What Are The Worst Charities

In the spirit of helping you to become better informed prior to making your charitable donations, I think it’s only fair to warn you that the rest of this article is not going to make you feel any warm fuzzies about the charities mentioned within. In fact, if you come away from reading this article feeling anything less than extremely disappointed and disgusted by them I would be surprised.

“The greatest enemy of knowledge is not ignorance, it is the illusion of knowledge.” – Stephen Hawking

I find this quote to be extremely relevant to the content of this article. If you will allow me to break through the illusion of what you know about charities, good or bad, I know that you will leave feeling well-armed against the “scams” that may try to present themselves.

Some people may have limited knowledge of the behind the scenes running of a charity. That’s ok. For the most part, it seems that public perception is simple and straightforward. I give this charity money- they use it to help those who need it. That’s pretty much how it should run, in a perfect world. I don’t think anyone expects 100% of the funds to go directly to the people in need, especially when you acknowledge that the charity itself needs a certain amount of money in order to stay in the business of helping people.

The big question then is…

What really makes a charity “bad?”

What factors determine its legitimacy and validity? The legitimacy of the charity is best found out with your initial assessment. “Hey this charity looks worthwhile, I should look into them some more.” Which should be followed up with- What does their website look like? How do they spend the money that comes in? (Sources like charity navigator are a good tool for this.) Do they have transparency on showing where the money is spent? Have I heard of this organization?

Unfortunately, that last one can be a little tricky. Some of the less than stellar organizations come up with names very similar to those that are actually among the top tier on doing good works and using the money for its intended purpose.

At the top of the list of worst charities to donate to is an organization called Kids Wish Network…… which may sound familiar thanks to its legitimately amazing charity counterpart with a similar name The Make A Wish Foundation. There are also other similar named organizations like Children’s Wish Foundation International and Wishing Well Foundation on the list of bad charities.

In an effort to raise money charities like the ones mentioned above have actually hired companies to make calls and collect money for them. The arrangement initially seems ideal; however, this is where the fine print comes in. Those “telemarketing” companies are reaping the benefits of the donations they accept. The general consensus from experts explains the break-down of how money should be allocated in a charity that is doing things right. For example, when it comes to “solicitations” for more funds (fundraising efforts) or contributions, a charity on the up and up should be spending no more than 35 cents to raise a dollar. Most of the “charities” that have made the top 50 worst list are spending at least 3 times that amount. Well-run charities rely on their own staff to raise money from a variety of sources. (Source: Tampa Bay Times, October 2017)

Not only are they spending a ridiculously high amount of money to bring money in…. The money that they are bringing in- doesn’t even go to the people it’s intended to assist. A very real and shocking example of this abuse of money is shown in the simple comparison of the actual legitimate Make-A-Wish Foundation located in Florida who reported raising $3.1 million in cash and utilizing $1.8 million of that on granting wishes. That’s roughly 60 percent spent on granting wishes- the actual purpose of the charity.

Meanwhile, Make-A-Wish Foundation’s evil doppelganger The Kids Wish Foundation in the same year raised $18.6 million according to its tax filing, yet spent only $240,000 on granting wishes…… that’s 1 percent of donations received. 1 percent! It’s easy to see right out the gate that although they were able to raise quite a bit more their handling of the money leaves much to be desired.

These are all really great examples of red flags on what makes a charity bad, thankfully with a good charity thrown in for comparison. Validating a charity’s legitimacy- that it’s not in financial trouble, and the transparency of the spending the organization engages in all lead to the path of determining whether a charity is worth your investment.

Resources to aid in obtaining information on various charities

As luck would have it there are resources available to help you cut the worst charities out of the running from the start. The Better Business Bureau has the BBB Wise Giving Alliance and The Federal Trade Commission offer resources to help you avoid charity scams.

How exactly do you submit a complaint about a charity?

So now that you know the bad side of charitable giving and the ways that you can weed out the disgraceful among them; what happens if, during your research, you find a charity that is doing something illegal or unethical? Whom should you tell? Where do you go to make sure that no one else contributes to one of these “scam” organizations?

The Federal Trade Commission again has resources meant for reporting organizations that are NOT on the up and up. The IRS and your state’s Attorney General or Secretary of State should also have something similar to a charity watchdog where you can fill out a form to report the fraudulent company.

Supporting charitable organizations is definitely a worthwhile adventure… but making sure that your donations go to what they are meant to instead of just lining some scam artists’ pockets is the most important aspect at the end of the day. We hope this insight encourages you to do the work so that, at the end of the day, you can feel confident in the charity that you have chosen.

If you’d like to learn how to make a big impact with a small budget, check out Charitable Giving For Small Businesses.