Personal Finance

Professional Beggars

I’ve written about begging before.  As long term readers can probably guess, I’m fairly opposed to it (heck, I’ll even tell people off for begging in “World of Warcraft”).  Aggressive panhandlers are one thing, but at least their actions are usually motivated by a personal and immediate need.  Others have actually chosen begging as a career, and often make very good salaries doing so (or managing other people who do it on their behalf).

The brother of a family friend does fund raising for universities.  He basically hooks up with a school, and is given the mandate to boost donations from alumni.  He’s paid 10% of whatever he raises for the school (and is given a staff to help him with marketing, calling alumni, etc).  This can certainly rub people the wrong way (when they make a donation, they probably don’t realize that 10%+ is being taken off of the top to pay this guy), but from the university’s perspective, they’re way ahead (even after giving him his cut) if he can dramatically increase the donations.

dd-sick-kidsAt the beginning of the year Michael O’Mahoney left his job as the head of the “Sick Kids” fundraising arm, a position which paid $624,103 in salary and benefits.  Anyone who has spent time downtown in Toronto has seen the Sick Kid canvassers, who flank a sidewalk in pairs making it impossible to walk past without being solicited from one of them.  It’s pretty had to get angry at people fund raising for children who are ill, and to their credit they aren’t pushy at all, but it’s always bothered me that these young kids are being paid to shake down pedestrians.  Friends have insisted to me that they’re volunteers, not paid employees, but after I looked into it (I asked them on the street and looked on-line) it became quite clear that they are paid – currently starting at $12 / hour.

It has been so successful that recently the Red Cross has adopted a similar campaign here in KW (shaking down employees outside of RIM).  I suspect in the current economic climate, a number of students would be tempted to do this as a summer job – $12 / hour is a lot better than they’d be earning at fast food or doing yard work.

When I was a child my mother used to go door-to-door collecting for the CNIB (her grandmother was blind and glaucoma runs in the family).  This was begging as well, but I feel more comfortable with her doing this as a volunteer than someone being paid to do so. Even if someone supports being paid to fund raise, should people be getting rich doing so? (as in the case with 10% of school donations or an annual salary that’s more than 1/2 a million dollars).  I’m pretty sure this would bother many donors.

One of my math teachers in high school (a raging Scot) ranted one time about how he wouldn’t let his daughter participate in school fund raising activities because he didn’t want her “begging from the neighbours”.  The same guy compared an annual all-school hockey tournament to Nazi Germany, so at the time I thought he was a few cards short of a deck.  As I’ve gotten older, I’ve come to appreciate his perspective, and I think I’d be reluctant to allow my children to participate for the same reasons.

A friend of mine donated to Sick Kids the first time he encountered them on the street.  After he gave them $20, he was subjected to a continuous stream of requests for more money (phone calls, letters, etc).  He figures they quickly burned through the $20 trying to get more money out of him and he eventually insisted they take him off of all their lists as he was sick of being disturbed (and has said he’ll never donate to them again).

In late 2006 a scandal erupted with the Canadian arm of Mothers Against Drunk Driving that they were using almost all the funds raised to pay salaries and fuel additional fund raising activities with very little going to actually combat drunk driving.  My experience with non-profits has sadly been that this isn’t terribly unusual.  Good intentions are considered worth as much as actually accomplishing something.

“The Road to Hell: The Ravaging Effects of Foreign Aid and International Charity” by Michael Maren is an amazing book that details his desperate attempts to do good work in Africa, while being confronted with the reality that his work either was ineffective or actually harmful to the people he wanted to help (and was subverted for the benefit of those in power at the NPOs and in the African nations).

Do you donate money to charitable causes?  If you do, how do you ensure that your donation will be used effectively?  How do you pick where to donate?  Do you think it is reasonable for people to be paid for fund raising?

31 replies on “Professional Beggars”

Interesting post. I made a small donation to the SOS Children’s Village charity last year and the amount of mail they send me is unbelievable. One of these days I have to contact them to get removed from their list.

I still donate to charities – hopefully the money is going to the right places.

Another area of “fund raising” to watch out for is around weddings. A long time ago newlyweds needed help to get started with their lives so people had stags etc to raise money. Now they can be just a money-grab. Baby showers can be the same thing.

Mike: It’s funny that you raise the wedding point, I’m going to be the best man at a wedding next month! We did the stag party without hitting the guests up for money (and without strippers), so I think I’m ok for that one…

Please watch out about the donations. I heard that some NGOs sell your private information to other NGOs. You will get unlimited amount of solicitations for donations from NGOs that you never heard of.

All these professional beggars are actually salespeople. They are selling you charity indulgences in exchange for your money.

I had to raise cash on the streets for a cancer charity a couple of times when I was a teenager (as part of some school personal development thing) and it was among the more demoralizing experiences I’ve been through. The things people will say/do! I actually bet those fundraisers earn every penny of that 12 bucks an hour.

Most of my monthly donations go to WWF and apart from a quarterly newsletter I get in the mail (and could probably opt out of?) they leave me alone.

My least favourite fund raising is parents shilling for their kids at work. If your offspring’s school is making him sell chocolate or aspidistras for charity at least have the special little snowflake come in to the office and do the hard sell in person, rather than sitting with his feet up while you do it!

Charity’s are run like any other private business. The only way they can be successful in achieving their goals is to pay a fee or percentage to those individuals who get them their business, otherwise they won’t be successful. When I donate, I know that a portion of my process goes to the organization so they can continue to gather more donations. Everyone has to eat, even the people who are involved in running the charities. If one of these guys is bringing in a 1/4 mil for his services, good for him. He’s probably someone that I’d like to have working for me.

What I don’t like about Not for Profit Organizations and especially Religious Organizations are some of the devious ways they attempt to influence people to donate. This article reminded me of the author Robert Cialdini’s recount in his book Influence – Science and Practice, of how the Hare Krishna Society became very successful at gaining donations. The Krishna’s would gather in high traffic areas such as airports and train stations and approach pedestrians with a free gift, usually a book or a flower. They would simply hand over the gift and then ask the unsuspecting target for a donation or contribution. In doing this the pedestrian would feel more obliged to give a donation because they had received a gift first from the canvasser. I have had this personally happen to me a few years back when I received a letter from a Religious organization with $5 enclosed…very sneaky but effective technique.

When I donate I only choose those organizations that I know don’t go out of their way to exploit peoples weakness to gather donations.

Nick: I definitely agree that charities are run like any other private business, and the point I was trying to get at with this post is to question if that is appropriate. Like your own objection to misuse of the reciprocity principle, it bothers me to have my donation used for further fund raising or to pay extravagant salaries (and I wouldn’t be interested in supporting an organization that did either).

There are a lot of good reasons to work for a charity. To get rich doesn’t seem like a particularly noble one to me. I’d have problems sleeping at night if I was earning a high six-figure income by subverting money donors though was going to help a specific cause…

Giving to charities has been something my wife and I had problems justifying especially because of the high overhead costs of these organizations. The only benefit to giving to registered charities is that the donations are tax deductible. This is not enough of an incentive since we desperately want most of every (after-tax) dollar that we donate going towards the people who need it. This is an unrealistic expectation for organizations like Sick Kids that pay their execs handsomely. So we opted for a different, simple route. We have decided to divert our charity money to helping our retired parents financially (they need the help) as well as sick or elderly relatives who reside outside of Canada. We can now be assured that most of the money gifted (we tend not to call it charitable donations anymore), goes towards the people who need it most. No more charitable donations claims on our income tax returns but we feel better about ourselves.

Shayne: Thats a great idea!

You got me thinking…how feasible would it be to start your own “Family Charity” so that you could get the tax write offs?

Generally speaking, working at a non-profit is not a way to “get rich”. While there are clearly exceptions, most employees of the non-profit sector (at least here in BC) are paid well under marketvalue salaries for their positions.

I don’t have a problem with some of the money I donate going to administrative costs; it’s the ratio I’m concerned with. I believe Oprah’s charity organization channels all donated funds to their work, but without a benefactor like Oprah to absorb the administrative costs privately, I don’t think thats viable for the vast majority of organizations.

Shaynepathum: I absolutely agree with your approach. It’s funny, many people wouldn’t consider that “charity”, but when I tell people that “charity begins at home”, that’s part of what I mean (taking care of yourself, family and friends).

J-Bird: Yes, that’s my feeling too. I think it *should* be a pretty obvious statement that “no one works at a non-profit to get rich”. But clearly some people do. I’m ok with reasonable admin costs, but clearly it is excessive at a number of charities…

My biggest personal beef is when you go somewhere (Loblaws and Walmart seem to be notorious for this), and they solicit you for a dollar or two donation at checkout time.

At face value it looks like a nice gesture, but to the corporation, I’m sure it translates into a hefty tax deduction on their customers’ dime.

I don’t mind contributing to charity, but when I do I prefer to donate somewhwere they publish their administration cost percentage, and I get a tax recipt for my donation.

I tend to donate to the smaller local charities like foodbanks, and usually in the form of actual food, which helps eliminate any of my donations from being diverted (although i guess they could just take a larger portion of someone elses donation to cover).

I read somewhere (don’t remember source although I think it was G&M) that the United Way has the largest “Overhead Costs” of any charity in Canada, running around 36%! That means only 2/3 of the price of your cup of coffee every day goes to the actual people in need.

I live and work in downtown Toronto. I walk to work. Practically every day I see these people out asking for money. I usually have to deal with them multiple times per day. They’re just as bad as the actual (poor) career beggers on the street. And it’s not just Sick Kids and Red Cross doing it. Doctors Without Borders, Greenpeace are two more that immediately cross my mind and I can’t think of some others right now. Because I’m constantly bothered by them I REFUSE to donate any money to those charities.

With regards to the constant mail, phone calls, email, etc from these charities after they have your information, even organizations like Blood Services hound you for further “donations.” My girlfriend gave blood once last year and BS constantly call her to make another appointment. In fact they called just yesterday after dinner. She finally told them to stop calling or else she’ll never donate blood again. Geez, you try to do a good deed and you get hounded like this!

lister: I knew there was a third one I’d seen with the same setup, and it was Greenpeace! Thanks, that’s been bugging me.

No good deed goes unpunished as they say. These organizations should definitely factor in the “bother” element when deciding how often to solicit from people.

To all who are concerned with the amount of donated money that gets spent on overhead costs: consider giving to small charities in your community instead of big ones. I’m involved in an emergency food bank that serves a western area of Ottawa. We’re an organization of about 100 volunteers that celebrates its 40th anniversary this year. We don’t fund raise and we don’t pay any salaries. Our expenses consist of a monthly phone bill, grocery bags, stamps and envelops for mailing receipts, and monthly bank fees. A few years ago we bought some new freezers. Our annual budget is about $20,000. The bulk of it (90-95%) goes to buy perishables to supplement the food that is donated and distributed monthly, and to provide a hefty Christmas hamper to about 250 families.

If you want to know how an organization you’re considering supporting uses its money, go the Goverment of Canada Charities website. All financial information about any organization entitled to issue charitable receipts is publicly available there.

I work for a non-profit and have worked for other non-profits previously. J-Bird is right. I make about 2/3 what I would make in a profit-oriented business. The only people in the NPs I know about who make big bucks are the accountant, campaign director/fundraising professional and Executive Director. Oh yes, and people in IT. The people who do the day-to-day work are not getting rich.

As for the idea that it is somehow wrong to pay commissions or a healthy salary for fundraising, that’s incredible to me. If you don’t have a professional fundraiser who has the ability to convince major donors to contribute you simply won’t make the money to do what your organization is there to do. Do you think that wings on hospitals magically appear due to $20 contributions from people on the street and $2 donations at the checkout? They don’t. You have a handful of major donors giving $50,000 to $1 million plus for big projects or they would never be able be able to break ground. The $20 donations buy the beds, put up curtains, etc. but the bricks and mortar have to be there first. Without a professional fundraiser you will never see those big donations. (Disclaimer: while I won’t discuss what my own NP does I will say that I don’t work for a hospital foundation. It was just an appropriate example.)

We do one mailing campaign, one telephone campaign and one gala event per year (so I don’t think we harass people, although the folks I have to invoice 3 or 4 times before they actually pay up might differ with me on that). Yes, some other groups do a lot more but you can always ask not to be solicited. You donate when you want to and get your tax receipt but escape the solicitation.

One big problem that NPs have is that we can’t get enough volunteers when we need them or to do what we need them to do. So, sometimes hiring someone on commission makes a lot of sense. If you had 1,000 people to phone in a 2 or 3 week period and you only had enough volunteers to call 300 of them what would you do? Leave the money that those other 600 people would have donated on the table? Or pay somebody (or a few somebodies) 10% commission to call them all? Say even half of those people give you only $10 each. That is $3,000. Subtract the commission and you have $2,700 you would not have had otherwise. That is a good deal.

If you have a concern about how much of your donation actually goes to the projects you should ask, get a copy of the last annual report, look them up online, etc. The generally accepted rule is that you want no more than 20% to go to overhead and administrative costs. That means when you pay 10% commission, you are well within those guidelines, BTW.

[…] Professional Beggars – by Four Pillars Mr. Cheap begs the important questions (ha ha, couldn’t resist) – Do you donate money to charitable causes?? If you do, how do you ensure that your donation will be used effectively?? How do you pick where to donate?? Do you think it is reasonable for people to be paid for fund raising?? These are excellent questions that all of us need to be asking ourselves, especially considering the moral decay in our modern society; which seems to be increasing daily… right before our very eyes. […]

I don’t know how it is for other countries, but Charity Navigator (I think it’s is a great place to get basic stats on charities in the States. It compiles data that’s a matter of public record because of the country’s taxation laws. NPOs and the like have to report things like the amount raised, amount spend on fundraising, amount on staff, top salaries, etc. Charity Navigator compiles it.

I only give to a few organizations, one applies 87% or so of donations to programs. The rest goes to staffing salaries, fundraising, etc. Their CEO earns a lowish 6 figures, but given the size of the organization I think he deserves it.

As for the street stuff, one thing I HATE about working in DC is that I may get accosted 3 times on my way to work. I don’t mind the panhandlers and I like the street musicians and may even give them money. But it’s the people doing fundraising and petitioning for various causes that get my goat. There are so many and you have to plan your route to avoid them if possible. Some almost block the entrance to the metro station! The only such group I’ve seen and liked was one that waited until the light was red and then walked up and down the line of stopped cars (big intersection, long light) with giant signs which had a url for a carpooling site. They didn’t impede traffic and they didn’t personally approach any of the drivers, but they provided potentially useful info. Least invasive.

I don’t really think there’s anything wrong with paying people to help raise funds as long as it is part of an overal sound business. You have to spend money to make money, right? As a donor, presumably I belive in the cause and want them to raise as much money as they can, so as long as they are using the funds wisely I don’t mind.

I mostly donate to World Vision. When I signed up I asked how much of the money is directed towards actual aid rather than admin/marketing (something like 85% I think?). I was satisfied with that and I believe my money is going to help someone in need. They do occasionally follow up with opportunities to sponsor particular initiatives but it doesn’t really bother me. I think it’s smart of them to work to foster a connection between me and my sponsor child.

WilderMiss: I guess that’s the heart of the matter, what is using the funds wisely? It takes money to make money is all fine and well, but you clearly care about what portion is going through to aid since you asked about this specifically (at what proportion going to admin / marketing does it stop being ok to spend money to make money?).

Individual sponsorship is certainly “smart” from a marketing perspective. You may be surprised, but your “sponsor child” may not actually be receiving the funds you donate (or is receiving far less than you suspect), or if they are, they may be harming the child:

The book I referred to in the post also deals with this issue at length.

Please don’t take this comment as an attack on you for donating to World Vision (I have no idea how well or poorly they are run). I’m sure it comes from a spirit of generosity and wanting to help someone in need. I’m sure you’ll agree that it’s better when it actually *is* helping someone and not just giving the appearance…

[…] Cheap from Four Pillars presents Professional Begging, and says, “A discussion of charities – are they professional […]

hi! as a young someone that is being paid to raise money on the streets,i can tell you i do have my doubts,i feel uncomfortably being paid out of the money that good people give.on the other hand its a job and a hard one let me tell you! i come back with no voice(from calling out strangers)and sour feet.
sometimes scary perverts come up to me. and sometimes someone steals part of the money.i do hope the money i raise will help someone.but as i said i do have doubts…

Sorry to hear that you or your friend had bad experiences with NPO’s. First off I don’t agree with the term begging or panhandling because that is not what it is at all. Any NPO’s following an ethical code should not harass you for your donations if you clearly stated you do not wish to be contacted again. There is also a regulation how much of revenue should be used on Admin. It is also the responsibility of the donor to limit their level of solicitation, it is wasteful for the NPO’s resources for them not knowingly having to “cultivate you” when you clearly are not interested in developing any further in the organizatin, and wasting other donor’s money as well. Regarding street canvassers, obviously those who are bothered by them do not know how to socialize with people on the road, they will leave you alone if you kindly signal your disinterest, what about those pressure sales at FOR profit companies, do you get ticked off by them as much as you do? THey are sales people in the end, selling different things, one may be for a more socially responsible cause while the other, jsut to rip you off. So at the end of the day, the whole idea of NPO and the need for such organizations is to compensate the difference in economic classes and affluence in society, and internationally provide aid to those who may have nothing going for them. I think it is up to your interpretation what you can be sold on as something that strikes you as a need. Others may sell you on providing nutrition for hungry children, with little schooling, but if one says, heck, they’ve always lived in those environment that is their natural way of life, then by all means stand on the sidelines and not participate. but for those who wish to , there are organizations with professionals who would earn much more in a for-profit company for the same level of leadership but chose to work in NPO instead. NPO’s are fighting for resources with the FOR Profits and asking the people to choose between satisfying their own needs or sacrifice and provide for others. If you ask me, the latter is much harder work of the two in this competitive world.

After knowing how much some of the non-profit CEO’s were paid, I made it a point to research the fund management of the charity organization I wanted to volunteer or give. It bugs me that after donating , they will give you more fliers, t-shirt, give-aways and etc. Why not just save the cost of those materials and use the money for the cause?

Oh yeah, I really like Salvation army some of their Kettle ringers are volunteers but the regular ones are paid too. I used to volunteer with them counting the kettle money. But the people there are wonderful. They never attempt to invite me in their congregation.

Below is what prompt me to look further about a charity:
High paid nonprofit CEO in 2011
Goodwill industries CEO Michael Miller -earned $742,875
Oregon Public Broadcasting’s Steven Bass -$333,670
Mercy Corps’ Neal Keny-Guyer -$319,996 – from this site you can look-up the charity organization you want to know and their appropriation of funds.

Have you seen the “Wounded Warrior” charity ad lately? 50 cents of the $1 you donate goes to the CEO who is earning 314,000.00 a year. Only 30 cents actually goes to the cause. What a scam..our wounded warriors are used by these greedy entrepreneurs.

I work for a non for profit organization. Having read your text I can say yes, if the organization is just collecting funds, if it is just a mediator between you and a disabled person – then you do not want much of your donation to be spent for salaries. But an organization may be campaigning for some cause – like Greenpeace – writing and publishing reports, speaking at events, persuading politicians for legislation change etc. Then it would be quite ok, if a big part of donations goes on salaries, honorarium, travel expenses etc. And many charities do not only just give your money to a person in need, but try to get some change in legislation etc. Of course they need to pay salaries to those experts, who work for a change, try to get positive precedents in courts or do campaign in any different way.

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