How to Determine If a Charity Like Kony 2012 Is Worth Your Money

How to Determine If a Charity Like Kony 2012 Is Worth Your MoneyIn the past couple of days, a charitable campaign called Kony 2012 has spread across the internet with a momentum normally reserved for cats, mostly due to a compelling 30-minute viral video condemning an unambiguously evil figurehead. It feels good to band together to fight something bad, but before you go handing your money to just any organization, no matter how noble their cause appears to be, it's worth finding out how they're going to spend it. Here's how to do just that.

I'm taking CliffsNotes from Clay Johnson's previous post on tracking down how your charitable donations will be spent (maybe you're interested in his book), but applying them directly to Kony 2012. I also asked Clay a handful of questions about it via Twitter while I tried applying his techniques.

Here's how the money susses out:

Step one: Find Their 990

Charitable organizations are required to fill out an IRS Form 990; this form details how an organization spends its money—a great starting point if you're thinking of giving them yours. As Johnson points out, this form is "far superior than a charity's annual report because there's less marketing inside of it, and more brass tacks."

To find the 990, normally all you need to do is a minute or two searching your Google or Bing of choice. Doing so for the Kony 2012 campaign—specifically, the Invisible Children organization behind the campaign—will land you at the Financials page of the Invisible Children web site. (If Google's giving you trouble, you can also use GuideStar; a free registration will get you what you need for almost any non-profit.) Here's Invisible Children's 2010 990 form.

Step two: Break down their spending

Now that you've got the 990, it's time to see where the money's going.

As a first step, Johnson recommends you find out how much a non-profit spends giving grants. The reason:

If the non-profit is giving a substantial amount of its revenues as grants out to other organizations, then taking a look at those organizations and figuring out whether or not to give directly to them is an option worth considering. That may help your dollars get closer to the source of the problem you're trying to solve with your money, giving them more impact.

In this case, you'll find that, of $13.7 million in revenue, Invisible Children spent 2.8 million on grants (about 20.4% of their considerable revenue). Already, Johnson suggests that this at this grant amount, you should "start looking for comparables"—i.e., other charities with the same goals, possibly including those Invisible Children gives grant money to.

If you examine their expenses more closely (Part IX of the 990), you'll see that, beyond grant giving, not much money at all is going to direct services. Let's break it down a little:

  • $2.8 million goes to grants, as noted above
  • Over $1 million goes to travel
  • $851k goes to production costs
  • $357k goes to film costs
  • $244k goes to professional services

Essentially, the flush non-profit spends as much on travel, film-making, and lobbying as it does on serving. That's generally a red flag. They also granted more money in 2009 than 2010, even though their revenue increased by over $4 million between the two years. You can read more from the Guardian.

Next, find out how much the organization pays its executives. Again, from Johnson:

If a non-profit is giving a substantial portion of its revenues to its executives, then it's not for me. I want my dollars going to solve problems not to line pockets.

Page 7 of their 990 shows that Invisible Children spends between $84k and $89k on their three most compensated employees, which, according to Johnson, "looks about right for their funds raised." So no major strikes there.

Third, Johnson says you should evaluate the practices of a non-profit beyond their accounting, and to do this, he recommends GiveWell, an organization that does in-depth charity research using a rigorous review process to determine the most effective charities. Invisible Children did not pass either of GiveWell's criteria for evaluation.

That raises a red flag for me, but since Invisible Children has gotten a lot of attention lately, GiveWell actually has weighed in in a blog post titled "The Worst Killer of Invisible Children is Not Joseph Kony". GiveWell's critique, like other Kony 2012 criticism, mostly rests on the oversimplification of the problem as presented by Invisible Children, questioning whether money donated to "intervene in a complex, disputed situation that you don't have the context to fully understand" would be better spent on "a simple situation where all humanitarians really do agree"—namely malaria, which last year " caused an estimated 655,000 deaths, mostly among African children.

So... What should I do?

Things get complicated quickly when you start making value judgments on how to best help people, but where it is possible to make quantitative comparisons, you can learn a lot. I think most charities would agree that there are few wrong ways to donate, but if your goal is to have the largest impact per dollar donated, these numbers and analyses can be very helpful.

You can certainly donate money to Invisible Children, and despite some criticism, it appears doing so isn't necessarily a bad thing to do. If your goal is to have as great an impact as possible in the lives of those directly affected by Kony, you may want to instead give to a comparable charity, or one that Invisible Child grants to. If you've been moved, as GiveWell puts it, to "care more about Africans", then maybe giving to a top-rated charity like the Against Malaria Foundation is an even better bet—where 100% of your giving goes to malaria nets.

Either way, giving is good. Hopefully this guide has given you a better idea of how to do so and get your money's worth.

Image remixed from The Noun Project.

Thanks to Clay Johnson for his previous guide and for answering questions while I was writing this post.


About the author: Pavel Ciorici


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