Verify: How do charities spend your donation dollars?

Verify: How do charities spend your donation dollars?

When Americans are in peril, the rest of us pitch in. Sometimes with our hands, sometimes with our wallets.  

But, I’ve been listening to the buzz on Facebook, and it sounds like a lot of folks have lost trust in donating to some of the America's biggest charities.  

The Red Cross, in particular, has been a target for people who believe the charity spends too much on salaries and not enough on aid.

So, I’m going to verify this… how do charities spend your donation dollars?

SALVATION ARMY

I’ll get to the Red Cross in a moment. But I’m starting my day, in Houston, at the local Salvation Army headquarters.

The organization has rented a large parking lot for a staging area. They’re cooking meals and loading canteen trucks. Each canteen can serve as many as 1,500 meals. Volunteers from around country drive the trucks into hard-hit neighborhoods.

To date, in Texas, the canteens have served 1 million meals and snacks and the Salvation Army has raised $34 million for hurricane relief.

“We are serving meals to the people who are out here cleaning up their houses from the mess that Harvey left,” says Joyce Demski, a volunteer from Alpena, Michigan. 

Because, on the Verify Facebook page, you’ve had so many questions about how charities operate, I took them to Major Melody Davis, Associate Area Commander.

“On Facebook, Jessica said, ‘I've heard the SA most of the money doesn't go to the people when you donate,’" I asked Major Davis.

“That is not true,” she said.

“If I gave you a dollar, how much of it is going to go to relief?” I asked.

“The whole dollar,” Davis answered.

“There are no admin costs?” I followed.

“There are no admin costs. That’s the one program in the Salvation Army, where 100-percent of donation goes to disaster relief,” Davis said.

That 100-percent figure kicks in when you designate your donation to a specific disaster; otherwise, the Salvation Army keeps about 18-percent for administrative costs.

Charity Navigator, Charity Watch and the Better Business Bureau all rank charities. They dig through IRS records and annual reports looking for financial health, accountability and transparency.  

"Why do charities need to spend money on administration?” I ask Katie Rusnock, with Charity Navigator.

"We often caution donors that it is good to see that a lot of the money goes to programs. But it's also important that an organization is run well,” Rusnock said.

It's important because the kinds of large charities equipped to respond to disasters, handle billions of dollars a year.

“What we're really looking at is financials. So charities that are bringing in more money are often running larger operations,” she added.

THE RED CROSS

The Red Cross is the biggest name in disaster relief.  

It's afternoon now, and I’m at one of its nine pop-up warehouses across Houston. What many people need now are supplies to clean up their flooded homes. It’s staffed, largely by volunteers and guard members. Mory Fuhrmann is a 911 operator from Ohio, trained by the Red Cross in logistics.

“Is this all donated material? Or purchased with donation money?” I ask, as boxes are filled with things like bleach, garbage bags and hand sanitizer.

“To my knowledge, all this material here is donated by corporations like Walmart or CVS,” Fuhrmann says.

During the storm, some local officials in Houston criticized the Red Cross for not being fully prepared to respond to the emergency. On social media, many complain executives are over-paid and not enough goes to where it's needed.

Mario Bruno is a senior leader in the Red Cross, and we've brought him some more of your Facebook questions.

“George, on Facebook, says, the Red Cross CEO makes $10 million a year,” I ask.

“And that is not right. The American Red Cross CEO makes $500,000 a year. She's had the same salary since she was hired in 2008. She has never taken a raise,” Bruno says.

Last year, according to page 7 of the Red Cross’ tax filing for 2016, CEO Gail McGovern made $502,000.

At Harvey's peak, the Red Cross says it sheltered, fed, cared for 50,000 people with 5,000 still in shelters.  For Irma that was 200,000 people and 8,000 still in shelters. 

It has raised $300 million for Harvey and $17 million for Irma.

Any time you give to a specific cause, like Harvey, the Red Cross says that's where the money goes, not to other programs. Here is what the Red Cross says about that on its website

The Red Cross honors donor intent and all donations earmarked for Hurricane Harvey will be used for our work to support this disaster.

“If I give you $100 and say this money is for Hurricane Harvey, how much of that money will go this effort?” I ask Mario.

“We are very proud to say that about 90 cents on every dollar goes directly to that response,” he answered.

That number also comes from their IRS filings. In 2016, its budget is $2.7 billion. They spend $286 million on administration. That leaves, 90-percent for humanitarian efforts.   

Charity Navigator gives the Red Cross 3-out-of-4 stars.

CONCLUSION

So, we verified, first hand, there's a large humanitarian efforts underway and large charities spend a percentage of your donations on administrative costs. It's up to you to decide if that's what you want from a non-profit.

© 2017 WFAA-TV


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