The Hidden Cost of Online Donations

One of the big takeaways from Frontline's recent story on the looming crisis in retirement accounts is that for all the efforts spent on deciding proper asset mix and risk tolerance, it is sometimes the little things that count most.  In that case, the "little things" were the fees passed on by actively managed funds that can quickly erode returns without employees even realizing it.  When watching that episode, I could not help but think of the similarities to small costs eroding charitable activities.  In this case, for all the concern about what charities do with donor money (which is, of course, justified), there are hidden costs that actually limit what donor funds even reach charities.  In this case, the important "little things" are credit card and processing fees that slowly cut into donations.

On the Locks of Love Scandal

Recently, the group Nonprofit Investor released a report on the well-known charity Locks of Love (which collects donations of hair to make wigs for underprivileged children with hair loss).  The scathing report accuses the organization of having over $6 million in unaccounted for hair.  The report makes some good points, but there are also some clear flaws.  I will discuss both.

The Big Three of Professional Fundraising

As discussed in this blog many times before (see here, here, and here), the inefficient use of professional fundraisers is unfortunately quite common among nonprofits.  As it turns out, there are three groups of organizations that are particularly notable in this regard: police & firefighters, children's cancer, and breast cancer.

The American Cancer Society's Bold Move on Direct Mail

In a surprising and bold move, the American Cancer Society (ACS) recently revealed that it is drastically cutting back on its direct mail activities aimed at soliciting donations.  The full details of this move are excellently described by FundRaising Success Magazine.  My focus here is on the financial aspects leading up to this decision and its possible ramifications.

Professional Fundraising and Politics

As discussed in previous posts of this blog, a surprising number of charities make use of professional fundraisers to solicit funds on their behalf.  The surprising part is that this occurs despite the fact these professional fundraisers often retain large portions of donations in the form of fees.  The end result many times is that the fundraisers actually get more of the donations than the charities get.  This phenomenon is present in advocacy and political groups as well, and extends to both ends of the political spectrum.

Is the Desire to Limit Overhead Stifling Advertising by Nonprofits?

Is nonprofit growth being thwarted because the need to keep accounting overhead low prevents sufficient advertising by nonprofits?  My take on this issue, featured in the Nonprofit Quarterly, is available here.

When Summary Accounting Metrics Fall Short: The Case of Breast Cancer Charities of America

Many donors rely on summary measures of accounting performance to assess the financial propriety of nonprofits.  While accounting statements certainly provide important information about a nonprofit and its operations, a simple glance at summary measures can often fail to provide an adequate picture.  A case in point is the Breast Cancer Charities of America (BCCA).  A quick review of their website and their overall financial performance paints a picture of a growing organization committed to providing assistance and research to those suffering from breast cancer.  A deeper look into the financials reveal a more complex story.