There are over 1.5 million charities in the world, each with its own impacts and obstacles. Clicking the “Donate Now” button on a GoFundMe page is easy enough on our end, but there’s a lot more that philanthropic organizations have to consider when approaching their causes. Being more aware of considerations such as distribution, resource allocation, and trust can help us be more valued and effective members of the philanthropic community.
You probably didn’t think twice about how the can you dropped off at your sorority house for formal points would actually get to those in need, but the process is quite complicated and costly. Organizations spend immense time and money on collecting and distributing quality goods while ensuring their delivery is not intercepted. For example, The Mississauga Food Bank in Ontario, Canada faces yearly costs including $123,930 for their warehouse, $3,000 for packaging, $23,380 for delivery trucks, $59,150 for volunteers and $236,600 for the staff that manages the process. That’s almost half a million dollars a year on logistical, behind-the-scene expenses! The costs only continue to increase as you consider more expansive international organizations.
Because charities face so many expenses as they distribute their goods or services, they are forced to make difficult decisions regarding resource allocation. How a charity spends its money is not only a major consideration for the organization itself, but is also of great interest to those contributing to it. For this reason, charity “watchdog groups” act to evaluate a charity’s spending habits, among other things. Groups like GuideStar, Charity Navigator, and the Better Business Bureau provide useful information to donators while also putting pressure on organizations to spend their money wisely.
Despite the detailed reviews on watchdog websites, we often obtain varying, confusing, and sometimes unreliable information about charities’ practices. Thus, unsurprisingly, there is a lack of public trust in nonprofit performance. According to a Brookings Institute survey, about one third of Americans report having “not too much” or no confidence in charitable organizations. This distrust arises from ethical concern over issues such as compensation, conflicts of interest, publications, solicitation, financial integrity, and investment policies, according to a study from the Stanford Social Innovation Review. This is problematic for organizations and those contributing to them alike by inhibiting progress and impact.
By spending the time to look into charities’ allocative and ethical practices, we can develop trust for these organizations to make our contribution more meaningful and to help them more effectively support those in need.