Where Your Donation to Charity Goes

Charitable donation - Boomfish Wealth Group LLCAt Boomfish Wealth Group, we’ve found that the vast majority of wealthy individuals and families want to give back. But they also want to make their donation count. The same might be true for you: with so many charitable causes and organizations vying for your money, how can you make the best decision?

A recent article in CNNMoney sheds some light on donations to charity, namely where your money goes after you donate. You might be surprised to learn that not all of your donation goes to the cause itself. The Red Cross, for example, allots nine cents of every dollar donated to administrative costs.

If you’re feeling outraged right now, you should know that using a percentage of donations to pay for administrative expenses is necessary. Charitable organizations have to be able to pay their employees, fundraise, and perform other operations to keep the organization running.

If you want to make sure that your donation is doing the most good, CharityWatch advises that you look for a charity that will put at least 75% of your donation to the cause itself. (The Red Cross, at 91%, meets this criterion.) This may require some research on your part to find the charities that do this.

Other charities that meet the 75% benchmark include Feeding America (98-100%), the Salvation Army (82-100%), World Vision (85%), and Feed the Children (92%).

Of course, the ratio of administrative to direct aid costs should not be the only important criterion when choosing a charity. It is vital to look at how effective the charity is at accomplishing their mission. Most individuals also want to give to causes that are dear to them and their families.


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