Evaluating Charities

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This is a partial transcript of "Special Report With Brit Hume," Jan. 4, 2005, that has been edited for clarity.

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BRIT HUME, HOST: Whether you’ve got 10 bucks or $10,000 to give, the question is where to give it? The government provides some suggestions at the Web site USAFreedomCorps.Gov. But there are more than 70 relief organizations listed there. So how do we know which one is the best?

For answers, we turn to Daniel Borochoff of the American Institute of Philanthropy, which runs the Web site Charity Watch. He joins me from Chicago.

Mr. Borochoff, welcome. Thanks for doing this.


HUME: What are you looking for here; small donor or maybe even a big donor? You want to write a check to something that will do some good, get some aid flowing quickly? What do you look for?

BOROCHOFF: Well, the American Institute of Philanthropy has identified 23 groups that receive A and B-ratings. We rate groups A-plus to F. And this will really help people with their giving, because we look at the financial efficiency of the organizations. So that people can look at groups that have a good track record of being able to help in a disaster.

HUME: When you talk about efficiency, explain what that means. Does it have to do with the amount of money that goes to the cause itself, the amount of money that’s absorbed with charity and administrative cost? You know, we’ve had these big scandals. But we had it with the United Way, of course. And the Red Cross, there were serious question about how much money is being absorbed by costs of the organizations themselves. What about all that?

BOROCHOFF: We believe that an organization should get at least 60 percent of their budget to program services. Most of these international relief development groups are able to get 70, 80 to 90 percent to the program services. They shouldn’t spend any more than $25 to raise $100 on the groups that we are recommending for this crisis.

HUME: We’ve got the number $35 on the screen here.

BOROCHOFF: That is the minimum.

HUME: Minimum, got you.

BOROCHOFF: Most of groups are able to get $25 or more.

HUME: And you also have a test for cash reserves, as well?

BOROCHOFF: Yes. Groups — if they’ve already got more than three years worth of assets and reserve, then that’s a poor basis to be asking for more money. Most groups have less than a year’s worth in reserve and really do need your money to spend in the next year or two

HUME: Now, there are 60 percent getting through to the aid projects themselves, would seem, I think, to many Americans or many people, generally to be a rather high number. What is it? How is it that so much money gets absorbed in administrative cost? What causes that?

BOROCHOFF: Well, there is fund-raising costs, there is overhead costs. And people should certainly look for the more efficient groups. It does cost money to run an organization. We actually do a cash analysis so you can see how the dollars are being spent. That is something that is really important because there’s a lot of goods involved here. But if you are giving dollars, you need to track those dollars and see how those dollars are being spent.

HUME: Now, if we go to your web site, we can find out that sort of stuff, analyzed for each of the 23 organizations, which you do favor?

BOROCHOFF: Yes. People — those are identified and we give a letter grade rating.

HUME: All right. Now, I noticed the Salvation Army (search), which I have always been given to believe, had a pretty, good track record, at least in this country getting the money on the ground so to speak, was not included there. Why is that?

BOROCHOFF: They receive an 8-Grade. They just are not a large presence in the international response or don’t have a history of that. They are more domestic-oriented.

HUME: Well, does that mean that they wouldn’t be — it would be more difficult for them therefore, to be as efficient overseas? Is that what that means? I gather that size matters.

BOROCHOFF: Possibly they don’t have the established relationships that some of the groups like Oxfamily Care (search) that have been doing this for 30-plus years. Though they do say on their Web site, Salvation Army, that this is the largest effort that they’ve made in their history to help for the disaster.

HUME: When you speak of established relationships, what kinds of things are you talking about?

BOROCHOFF: Established relationships, a lot of these areas are hard to get into, and different languages being spoken, different skills needed. So it’s important the nonprofits have partner organizations that they can work with, such as the American Jewish World Services (search) has 24 different organizations that they are working with to help administer aid.

HUME: Which means, I guess, you know how to get people into the country. You know people who are in the government and so on? In other words, you know how to operate in the region?

BOROCHOFF: Oh, yes. Certainly. It’s complicated. There is a lot of hard-to-reach areas. You need all kinds of relations with certain people over there to get things accomplished.

HUME: Now, what about the United States as a presence in the world when it comes to disaster relief? There were some criticism of this country for the initial numbers and amounts that were named by the president, for being slow off the mark here. How does the United States normally shape up counting private donations, as well?

BOROCHOFF: They look better if you consider that all the government effort going in there and also considering the $5 billion that we give for international causes each year. But it still is only 2 percent of all private giving, by individuals, corporations, foundations. There’s only 2 percent of international giving. So while we give $241 billion a year, only 2 percent of that is going towards international groups. So we certainly could do better.

HUME: Well, now would you imagine that giving what we are seeing now, that would, that the amount contributed in this effort will be way disproportionate to the usual amount given?

BOROCHOFF: Certainly these international relief groups are already finding far more giving than they would receive in this short a time period.

HUME: Can they...

BOROCHOFF: Particularly being — OK.

HUME: Can they, in your judgment, handle it?

BOROCHOFF: Well, we’ll see. I mean there’s going to be problems. There’s going to be roadblocks. And I am concerned about the long term. The Doctors Without Borders (search) has already announced that they’ve received enough that they need for the emergency relief efforts.

HUME: Got you.

BOROCHOFF: That’s not true for the other groups as of yet. But I am concerned about the long-term needs. Because it’s got a lot of rebuilding, helping people get back up on their feet, that’s going to take a lot of time. And I really hope that people don’t burn out here. They’ve got to stay with it and not let disaster fatigue set in.

HUME: Appreciate it, Daniel Borochoff. Thanks very much.

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