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The Need For Transparency About How Charities Are Spending Donations

October 07, 2014
Transparency is needed to show exactly how charities spend their money, because many people believe that too much of the money donated to charities goes to paying executive fees and admin salaries. People are reluctant to donate money to a cause if they think that very little will actually end up helping those in need. Sr. Carmelo Cerrelli would like to see a change in this perception and transparency is the only way this will happen.
Most charities need to spend some money on their headquarters, and they cannot operate without administrative staff. A president or CEO is usually required to be in control.
 Even a charity that relies on volunteers is required to cover costs. Expenses can cover anything from providing local volunteers with equipment to international transportation of volunteers and aid.
Some charities need to keep large amounts of money in the bank, so that funds are always available. Other types of charity require a steady flow of donations to keep a service operating.
For example, a charity set up to help victims of an emergency needs to have funds ready for when help is desperately needed. Then it can provide medical assistance, emergency food rations or clean drinking water.
A local animal charity will require regular amounts of money to care for abandoned pets or injured wildlife. Much of the money raised will be spent every month on pet food, veterinary bills and expert care. Additional expenditure includes things designed to bring in more money, such as website costs, banner advertising on the Internet, newspaper appeals and marketing campaigns.
All charities ought to have full transparency about their spending, but not all of them do this. If spending and income ratios are not outlined on a charity website, or in the promotional material, then at least it has to be set out and published in their annual reports.
Fortunately there are several watchdog organizations monitoring how effectively charities use their funds. AIP (American Institute of Philanthropy), Charity Navigator, Better Business Bureau and Forbes have lists on their websites of the most effective charities, and their ratings show which charities do not make effective use of donated money.
Out of thousands rated on AIP's Charity Watch website, the highest ranked charities are ones which use less than 15% of their total income on expenses.
An enormous amount of money is raised by charities every year. A big international organization, such as the Red Cross, obviously needs to raise much more money than a small local hospice.
Most charities makes money from fundraising events, commercial sponsorship, marketing campaigns, legacies, retail sales, website donations, churches, Rotary Clubs and a number of other sources. They do not normally get government funding, unless the charity is involved in a government-supported project.
Without charities that rely on public support, there would be much more suffering in the world. While this is a valid reason for donating, not all charities deserve our support. Before deciding to donate we should always do some background research to discover how effectively a particular charity is using its income, and how much actually goes to the cause. Sr. Carmelo Cerrelli is an avid giver to global charities and also the founder of his own charity, he believes in giving but only if it is going to the people in need.