There has been a lot of internet chatter on what organizations to donate to in order to best help the Haitian people. Naturally, you want the maximum amount of your dollars to go to the people who need it. So you read articles like this one about Yele or you go to charity navigator and you check out what percentage of donations go to program vs. administration or fundraising.
The thing is, those percentages can be deceiving. One of the biggest expenses for any nonprofit is salary costs. So while your idea of “program cost” might be medicine bought and provided for someone in need. In actuality, program cost might be the salary of the program assistant who does paperwork in the office.
Or let’s say you receive an email report from a nonprofit that also includes a link for donations. You might think that goes to fundraising, but it probably gets coded with media, outreach, or campaigning.
How an organization codes things depends a lot on the person doing the coding. Some organizations are more likely to code things to show less administrative costs. Organizations that have been around longer have more experienced staff who understand that donors don’t want to see high admin costs. Organizations that receive restrictive grants will have more constraints they are working within. Large organizations are often more closely scrutinized.
Low administrative costs could also mean that administrative people are being screwed. The organization could be using a ton of unpaid interns to do work. Not only are they relying on free labor, they are restricting their labor pool to only those privileged enough to be able to work for free. Or they could just be underpaying their admin staff. I’ve seen full time admin positions in New York being offered less than $30,000 a year. Do you really want to support an org that doesn’t pay its people enough to even pay the rent?
All of that is to say that you should not use program cost percentage as your only decision maker.
Then there is the choice between large and small organizations. In the case of an emergency situation like Haiti, there are many large humanitarian organizations who have vast experience with catastrophes. They know how to set up camps and what to do for sanitation. They are experts at providing potable water and avoiding diseases. That is invaluable expertise. They have also been around long enough to have tested systems and they probably have survived a lot of scrutiny.
But there are downsides to larger organizations. Many of them do not work in Haiti all year round, although they may begin to now (especially if they receive massive funds that have been restricted to use in Haiti*). Aid workers flown in will not necessarily have knowledge of the language, community, politics, and culture – knowledge that will also be important in the coming days. Large organizations can be bureaucratic and experience diseconomies of scale. They are usually heavily populated by managerial class elites from the United States and Europe.
Smaller, local organizations are closer to the community. They are more likely to have local staff in key decision-making positions. Your money won’t go to pay salaries of people based in London or DC. Their people will be sticking around. They won’t be moving on to the next catastrophe when the immediate crisis is over. They don’t require large bureaucracies or thousands of dollars in conference calls.
But small organizations have their problems too. They can’t respond on the same scale as large organizations. Their inexperience can be costly. There may be less accountability, because fewer eyes are on them. The staff are even more likely to be massively underpaid. Their equipment is probably held together with duck tape and rubber bands. They are less stable, especially when new, and have fewer processes. The loss of one employee (and their institutional knowledge) can set the organization back months or years.
There is no perfect organization. If you want a guarantee that your money will go straight into the hand or mouth of a Haitian, then you should go to Haiti or Miami or New York and drop a wad of cash on someone. If you donate to a charity, you need to accept that some of your money will be spent on administration. Some may be spent on fundraising. A large portion will pay staff costs (program and otherwise). Some money will likely be wasted. Some may even be stolen. Given the absolute chaos in Haiti, expecting that not to be the case is just unrealistic.
So how do you decide?
Check the organization out. Go to Charity Navigator or Guidestar or the charity’s website. Look what people have to say about them. Read their 990s (the form U.S. nonprofits have to file with the IRS) or their annual report.
Who are the board members? How much do the big shots make – officers and employees? Board compensation is reported on 990s, as are salaries of some highly compensated employees.
How are their expenses broken down by function? One organization may have a higher percentage of program costs, but it is all in staff salaries. Another organization may have lower program costs but give that money in direct aid. One is not necessarily better than the other (humanitarian staff need to get paid), but it gives a more detailed picture than just program v. management or fundraising.
Does the organization have local offices? Have they been working in country for a long time? Does it look like they will stick around? Are they staffed by locals or is it all people from the U.S. or Europe?
What kind of programs do they do? Are they in keeping with your values? If you are passionate about environmental issues or health care for all, then you should support organizations whose mission most closely matches your own.
If the organization doesn’t have much history, are you willing to treat it like a startup? Are the ideas so great that you are willing to risk your donation on the chance that they can use this new (extremely rare) influx of capital to get their dreams off the ground?
My recommendation is to spread it around. Give some money to a large experienced organization with the planes and equipment ready to address the rescue, food, water, and sanitation needs. But also give money to smaller and/or local organizations whose salaries are paying locals and who are likely to stick around. Haiti will need help long after the Red Cross moves on to the next disaster.
You can find a comprehensive list of organizations to donate to here.
* If you send money and tell an organization that you want it to be used for a certain project or place, they must do that. In most circumstances, I would actually discourage you from restricting your money. For smaller nonprofits, funds for basic expenses are hard to come by. Having all their funding restricted actually weakens the organization and, in the end, could lead to less accountability – no money for auditors, bookkeeping staff, board training, etc.
Disclaimer: All thoughts and opinions on my site belong to me alone. I am usually quite careful not to post anything even remotely related to my day job. This post is a bit close to the line, as I work for an organization that is working in Haiti. They are not an organization that I have listed or talked about on my blog. I have no intention of recommending or not recommending them. If you know where I work, nothing should be read into that. I just don’t want to have to vet my blog through my work and, if I spoke about them directly, I would feel that obligation.