Think Philanthropically

When Charitable Organizations Mislead Donors

Last month’s column identified how donors like ourselves can suffer from a distorted perspective in the face of opportunities to make a donation depending on how we perceive the urgency.  This column will examine how misinformation, disseminated by charitable organizations, can produce philanthropic distortion.

“Would a charitable organization ever mislead potential donors?

Sadly, it is not entirely uncommon.”

What? Would a charitable organization ever mislead potential donors? Sadly, it is not entirely uncommon. There are, sadly, plenty of instances of outright fraud. It is pretty easy to set up a slick website or a “Go Fund Me” campaign that has no legitimate charitable purpose. Potential donors ought to be alert to potential charity scams. Fraudsters are incredibly creative. However, this month’s column is going to focus on three types of philanthropic distortion frequently perpetrated by reasonably legitimate charitable organizations.

DISGUISE.  Some charitable organizations completely disguise their real goals, or they deliberately hide information that identifies how donated money will be used. Some charitable outfits have turned this practice into a fine art. They may make broad statements like “we help kids”, but if a donor investigated the activities and funding stream of the organization the claim might melt under examination. Scrutiny, which some charities will resist, can turn up surprise findings. In some instances, donors might discover that the activities funded do not align with the statements the charity makes.

DESPERATION. A number of charitable organizations send messages to donors begging them to donate immediately to make sure that the organization will not shut down – or be forced to drastically curtail its activities. Let’s face it; many community-based charitable organizations exist in a starvation cycle. Funding for basic services can be utterly unpredictable. However, every charitable organization needs to have suitable financial disciplines in place so that they can manage scarce resources. A well-run charity ensures that they avoid situations where they are “weeks away from closing”. Donors should be wary of an invitation to donate that is primarily focused on an organization’s need to survive. The catalyst for a philanthropic response shouldn’t be to provide funding for survival – it should be to fund an organization’s ability to address the unmet needs of those it serves.

EXAGGERATION. A third type of distortion is subtle, but more common. It emerges when a charitable organization frames an issue incorrectly by using anecdotes that are presented as data.  It is a common tactic when a clear and honest message isn’t broadly compelling. This can include statements that are dramatic but difficult to disprove. A common tactic is to make claims using dubious information that can’t be independently validated. For example, let’s suppose a charity was established to give out free hockey sticks to young people in need. A prospective donor might be told something like “37% of kids in Canada can’t afford a hockey stick” as part of a fundraising effort. Unless there is legitimate data that supports the 37% story it could merely be a completely invented statement designed to grab the attention of sympathetic donors who want kids to have hockey sticks!

“How can philanthropists filter out disguise, desperation or exaggeration?

We should exercise due diligence.”

How can philanthropists filter out disguise, desperation or exaggeration? We should exercise due diligence. Philanthropists need to understand how donated money is actually used in pursuit of specific goals. It is also particularly wise to avoid appeals that highlight a charity’s need to survive.  It is also makes sense to ensure that the framing of an invitation to donate isn’t predicated on random anecdotes or unverifiable data. Having done our due diligence – let’s all be philanthropic!

Sam Watts serves as the CEO of Welcome Hall Mission www.welcomehallmission.com  He serves on several non-profit boards and is an appointed member of the National Housing Council of Canada.  He is the author of Good Work…Done Better www.goodworkdonebetter.com