Caveat Emptor applies to charitable giving too

November 17, 2013

Donate with caution!

Most of us know mankind often commits fraud and outright theft against fellow humans.

It also happens within charitable and non-profit organizations.

Several weeks ago, Harry Smith on NBC, reported a very negative story about Goodwill Industries. I suspect most of us have shopped at or donated money or goods to Goodwill. They are famous for hiring the handicapped as a major part of their mission in order to provide income and the dignity of work for many otherwise unemployable humans. On the surface it all sounds wonderfully benevolent and admirable. That is until, as Smith pointed out, some of the handicapped and disabled who work there make as little as 22 cents an hour! You read correctly....22 cents an hour! That comes out to a less than paltry $9 per week.

According to Smith, Goodwill workers repetitive activities are timed by observers and they are paid what they are then judged to be worth. No matter how it is explained, this seems more deserving of being called slave labor than just low pay. To make it even worse, Smith went on to report that one senior Goodwill executive was paid more than a million dollars a year, and many others were paid over a half million dollars. How can this be rationally explained, or even possible? I'm guessing these executives are timing each others productivity!

It all goes back to an obscure law signed into law by President Roosevelt in 1938 which shelters some employers from having to pay even minimum wages as an inducement for them to employ disabled or handicapped workers.

I'm sorry, but I was under the impression slavery had been abolished. How can those at the top of Goodwill look themselves in a mirror and not be totally embarrassed?

I encountered another despicable example of charitable failure a few years ago while playing golf at a resort in Florida. My foursome came to the tee of a par three hole where we were greeted by a very attractive lady who had a table with a sign indicating she was representing the American Diabetes Association. She said she was accepting donations of $5 in return for a chance to win a sleeve of golf balls if the golfer could hit a tee shot onto the green. I asked her how much of the $5 went to the charity. She said she didn't know. I asked how much of each donation she kept. Without a hint of embarrassment she replied, half. So, I went on, then half goes to the charity? She replied that she passed on the remaining money to the person who coordinated the event, and who had workers at every golf course in the area on most busy days, and he kept part of it for his work. It didn't take much imagination to understand that this was mainly a money making scheme for the organizers of these events.

I have seen many news stories over the years with the same theme. For example, organizations hire phone solicitors to call homes and request donations. These folks are very well trained and always begin a request for money by describing a person or group most of us will have empathy toward. After all, who can turn their back on requests to support burned children, veterans, disabled veterans, firefighters, or police. The problem is that many if not most of these operations net far more money for the fundraisers than the final beneficiary they claim to be representing. Money finally received by many charities who fund-raise this way will be a fraction of the amount collected.

I will also never donate money to any quasi political group claiming benevolent objectives for our nation. I speak specifically of organizations such as AmericansElect and their ilk. I wrote an article warning about them in late 2011. Careful investigation had shown this particular organization was started by a hedge fund manager. The moment I saw hedge fund manager connected to a supposedly benevolent political non-profit--I was stopped in my tracks. Information on their website showed a small group of individuals, including the leader, had provided several million dollars in seed money to start the organization. However, in the small print, it said these initial contributions were promised to be returned once sufficient funds were raised. I may not be the brightest bulb, but even I can see giant red flags when they're waving in my face!

Guess what subsequently happened? Just before the election in 2012 AmericansElect folded like a tent. Those who sent in donations were left to wonder what happened to the additional millions of dollars raised above the returned seed money?

From now on when someone I do not personally know approaches me to request a donation for any cause...the answer will be no. I will decide to whom I will make donations...after checking out the charity to ensure most of the money will actually reach named recipients. My current answer to phone requests is a firm but polite, "I do not respond to phone solicitations!"

We all know Caveat emptor applies to any purchase decision we make. Sadly, it applies to charitable giving too. Don't stop giving, but do stop giving carelessly!

Mike