Giving Tuesday: How to Ensure Your Donation Actually Helps
Ahead of Giving Tuesday on December 3, let’s look at how you can tell if a nonprofit is functional and why the feast or famine fundraising approach is hurting The City.
Disclosure: This author has worked for several nonprofits. This piece references none of them!
What’s Giving Tuesday
Giving Tuesday is the name for the trend of giving charitable donations as part of your Capitalist American Thanksgiving Holiday Experience. The idea is that you enjoy dinner on Thursday, brave in-person crowds on Black Friday, order to your heart’s content on Cyber Monday, and then assuage your guilt for contributing to Bezos and the other Billionaires’ fortunes by donating to nonprofits on Giving Tuesday. (Speaking of which, please donate to BrokeAssStuart.com for Giving Tuesday. We wouldn’t survive without the support of our readers.)
In the Bay Area, there are at least 31,000 nonprofits that employ over half a million people and contribute hundreds of billions of dollars to the economy. Plus, ostensibly, they do a lot of good!
What’s the Nonprofit Industrial Complex?
Don’t worry, this is a feel-good piece, but we do have to take a moment to talk about what people call the Nonprofit Industrial Complex. This doesn’t mean nonprofits are inherently bad or that charity is evil. It just means that rich people often use nonprofits to wash their money so that they don’t have to pay taxes or use it.
It’s not just corporations greenwashing their reputations or rich people using foundations to donate so that they can invest and increase their total wealth. Others have come to rely on nonprofits to plug holes in the societal safety net, especially in San Francisco.
Why So Many Nonprofits?
The City under-funds essential services and relies on nonprofits to close the gap. Then they blame labor unions (which do make things more expensive but only because they actually get their workers paid fairly!) for not being able to do things in-house.
We can expect this pattern to continue under our new mayor, who has a background in using nonprofits to get city work done for what he called “faster and cheaper” (read: cheaper on labor, AKA avoiding working with unions). Again, it doesn’t mean these nonprofits are evil! But they can be tools of evil if placed in the wrong hands.
How To Tell A Good Apple From A Bad One
Charity Navigator uses publicly available info to rate an organization. So does Guidestar. But these organizations perpetuate the overhead myth, which is the idea that a nonprofit should spend very little on administration and most of its funding on programs with measurable impact. On paper that looks smart.
In reality it means underpaying and giving tons of complex work to non-program staff to make sure the org stays compliant, wins funding, and does everything on the backend so that the program can deliver on the mission. If you’re not inside a nonprofit or your leadership is not transparent, it’s really hard to see what all that labor amounts to. The back end work is meant to be quiet and unseen.
What Form 990 Says and Doesn’t Say
Organizations have to fill out a tax form called the 990. It lists anyone in the org who “makes” more than 100k, but the IRS has made special rules that in some cases conflate true take-home salary with total compensation.
In other words, you might see that an executive director at a major local institution makes $632,000 but in reality their take home pay is probably half that and the rest is “fringe benefits,” or what it costs the company to pay for his health, retirement, company payroll taxes, and so on. Is he still overpaid, especially compared to the lowest-paid staff?
Hard to say, but in this house we support unions and some of these major institutions continue failing to meet collective bargaining units with full faith efforts. They drag their feet long enough that talented organizers get scooped up by other opportunities (or promoted up so that they’re no longer personally invested in the good fight) and troublemakers get disciplined for other more fire-able offenses or even laid off. That kind of thing isn’t going to be apparent on a 990.
Form 990 also shows the operating budget. It discloses major funding. But it’s not the full picture and shouldn’t be the only measure of an org. Unless you have a nonprofit background, the form might tell you very little about the efficacy of the organization.
The Tough Truth
So how do you know if a nonprofit is legit? Honestly, if they’re passing their audits and in good standing with the State and Federal Governments, they’re probably legit (like, they’ll spend your donation on fulfilling their mission). But that doesn’t explain how they define fulfilling their mission. This room for interpretation results in oopsies like funneling the money toward giving a homie hookup to a staff member’s boyfriend or throwing money at a concert in UAE.
The truth is, every nonprofit has a fine patina of what some might call dirt. Some are more egregious than others. Read their website and check out their mission. Try to find evidence of good governance and policies. There are many ways to vet a nonprofit, but remember that publicly available data doesn’t always tell the full picture.
You Can Still Give
One thing’s for sure. If you participate in the feast or famine of Giving Tuesday, remember that your money is definitely making a big impact. It might mean the difference between layoffs and program cancellations for some folks.
It’s so easy to be a skeptic and it takes a lot of work to do all that vetting, so a good practice is to rely on your friends who work in the nonprofit space. They’ll tell you if the org is good.
If they refuse to answer but say, “I love the mission,” that tells you everything you need to know.
And once again, please consider donating to BrokeAssStuart.com. We literally wouldn’t survive without the support of our readers.
Howdy! My name is Katy Atchison and I'm an Associate Editor for Broke-Ass Stuart.
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