from the hip

I have always admired the fact that Americans devote so much time, energy, effort and money to charities. To me, this is one of many great things about American society.

However, I have often found myself to be pretty naive, too. And I may have been just that in this case as well.

While it is true that Americans do give, and some quite heavily, to charities, American charities may not be any better than charities in other parts of the world. I’ve seen many analyses of charities where 80 per cent, 90 per cent of the money, and in some cases even more, never reach the targeted group or purpose.

Lavish spending, bad subcontracting, high salaries, lawyers fees, and lots of other things have, in the bad cases, explained how the money have simply disappeared.

In a report by four professors who specialize in nonprofit accounting, the amount of loss as a result of fraud in non-profit organizations was estimated to be 40 billion dollars.

the typical theft from a charity was committed by a female employee with no criminal record who earned less than $50,000 a year and had worked for the nonprofit at least three years. The amount she stole was less than $40,000.

The most costly cases, the study found, involved male executives earning $100,000 to $149,000 a year. The thieves in such cases had typically been with the organization the longest.

..

If the $40 billion figure is accurate, then the money lost to fraud equaled the combined giving by corporations and foundations in 2006, said Diana Aviv, president and chief executive of the Independent Sector, which represents nonprofit groups.

But Ms. Aviv expressed skepticism about the report, noting that it relied on the fraud examiners association’s estimate of overall fraud across all sectors, including government and corporate.

“They’re lumping all those sectors together, and it could be that the for-profit sector experiences a higher level of fraud, while the nonprofit sector and government experience lower levels,” Ms. Aviv said.

Nonetheless, she said, “even if the figure is $20 billion, that’s still a huge amount and needs to be addressed.”

Now, 40 billion USD is approximately 13% of the money given to charities in 2006. That means, that on the average, 13 cents of every dollar you give disappears. That’s pretty bad!

So for the future, study your charity closely before you give. You may be paying for somebody’s retirement fund in a Swiss bank!