While charities all have various overhead costs, some of the most effective nonprofits devote as much of their budget as possible to support their programs. When we're donating to a charity, most of us want to know our hard-earned dollars are being used effectively. This is where having the right information comes in.
When you get ready to make your next donation, arm yourself with some knowledge about what percentage of your donations actually go directly to charity, and what other factors to consider, so you can donate with confidence.
A Closer Look at Some of Your Favorite Charities
From the American Red Cross to the United Way, these are some of the most prominent charities today. We'd be surprised if you hadn't sent a donation to at least one of them. But do you know how much money they actually spend on programming? Thankfully, these heavy hitters are pretty transparent about their financial practices. And spoiler alert — they're not too shabby.
|Industry-Leading Charities||Amount of Donations Going Directly to Charitable Work|
|American Red Cross||~90 cents out of every dollar|
|World Vision||85 cents out of every dollar|
|Doctors Without Borders||~89 cents out of every dollar|
|United Way||85 cents out of every dollar|
|St. Jude's Childrens Hospital||82 cents out of every dollar|
|The Nature Conservancy||~71.2 cents out of every dollar|
|The Michael J. Fox Foundation for Parkinson's Research||88 cents out of every dollar|
|Feeding America||~98 cents out of every dollar|
American Red Cross
The do-gooders at the American Red Cross do a great job of spending your money when you donate. They manage to keep administrative expenses at less than 5% of their total overhead, and they spend about 90 cents for every dollar donated on actual programs that benefit the community. Whether it's teaching CPR or managing a crisis during the aftermath of a disaster, the Red Cross puts your money to good use.
Approximately 89% of the income donated to World Vision goes to help stamp out poverty around the world. While they're still well below the 33% benchmark at 10% in 2022, they tend to spend more on fundraising than other highly rated charities in this category. Nonetheless, if stamping out poverty is your passion, World Vision does a good job with your money.
Doctors Without Borders
The brave folks at Doctors Without Borders go into dangerous, impoverished, and remote areas to bring medical care to others, such as providing life-saving vaccinations. According to their website, about 89% of their total revenue goes to supporting their programs.
United Way is a massive privately funded charity that seeks to "bring people together to build strong, equitable communities where everyone can thrive." For example, they might address community equity in education, health, and economics and help provide resources to alleviate them.
Per their website, "For every dollar donated to United Way, 85 cents goes to [their] mission."
St. Jude's Children's Hospital
You probably immediately recognize St. Jude's Children's Hospital thanks to their digital fundraising campaigns. The hospital itself is a research facility that specializes in childhood cancers and other life-threatening diseases. The remarkable thing is that it's not cost-prohibitive. Anyone can receive treatment, whether or not they can pay for it.
Perhaps more remarkably, the hospital only spends about 27% of its income on fundraising and administrative costs. Considering it's a hospital with significant expenses, the fact that St. Jude's is able to spend only a little over a quarter of their funds on maintenance is impressive. In terms of the nitty gritty, 82 cents out of every dollar you donate goes directly to support St. Jude's work.
The Nature Conservancy
The Nature Conservancy is focused on protecting and conserving water and land across the globe. They work on every single continent to address issues of environmental significance. The organization holds themselves to the highest standards of accountability and ensures 71.2% of their income goes towards science-driven programs, according to their website.
The Michael J. Fox Foundation for Parkinson's Research
You probably know Michael J. Fox best for projects like Back to the Future or Family Ties, but his advocacy work for Parkinson’s research is even more impressive. In 2000, he founded The Michael J. Fox Foundation for Parkinson’s Research, and the non-profit has been working diligently ever since.
According to their website, they aim to spend 88 cents of every dollar you donate directly on Parkinson’s research.
According to the Feeding America website, the organization is a nationwide network of food banks, food pantries, and local meal programs. Everyone deserves access to nutrition and Feeding America helps bridge that gap for at-risk people.
Currently, 98% of all donations go directly to their charitable programs, which amounts to around 98 cents on the dollar.
Examples of Charities With Low Overhead
While these might not be the most popular nonprofits, these charities know how to get the most bang for their buck. With less than 10% overhead (a rare feat in the nonprofit world), these charities spend 90% or more of the money you donate on actual goods and services that support their missions.
- Greater Chicago Food Depository: As its name implies, the Greater Chicago Food Depository distributes food to the hungry in the greater Chicago area. They distribute some 200,000 pounds of food daily.
- The Conservation Fund: The Conservation Fund works with a variety of initiatives to conserve land, water, and other natural resources and operates in all 50 states.
- Give Kids the World: Give Kids the World is a resort village in Florida that provides week-long vacations, free of charge, to families who have a child facing a life-threatening illness.
- UNICEF: UNICEF is an international non-profit that uses a variety of programs, from emergency response to education, to support children. They work in over 190 countries to improve the lives of children through a variety of initiatives.
These assessments are based on Charity Navigator's own rigorous evaluations and are subject to change each fiscal year.
Examples of Charities With Moderate Overhead
That 10% overhead wouldn't be as impressive as it is if every charity could easily crack those numbers. However, these charities are so close to the top at about 20%-30% overhead that they should still be in the running for your donations.
- Oxfam America: Oxfam America seeks to end poverty. They focus on four areas that address both immediate intervention (such as natural disasters), as well as long-term solutions like public education and advocacy for social justice.
- The American Society for the Prevention of the Cruelty of Animals: The American Society for the Prevention of the Cruelty of Animals (ASPCA) focuses on two key issues: animal homelessness and preventing animal cruelty.
- Solomon R. Guggenheim Foundation: The Solomon R. Guggenheim Foundation is dedicated to promoting contemporary art and artists. They do much of their work through world-famous museums, which offer educational outreach and various artistic collaborations to the public.
- American Jewish Committee: The American Jewish Committee is an organization that works around the world to advocate for Jewish communities, as well as to promote human rights and democratic values for everyone.
Examples of Charities With Higher Overhead
These charities spend 30 cents or more for every donated dollar on things like overhead, administrative costs, and fundraising.
- George Bush Presidential Library Foundation: The George Bush Presidential Library Foundation is a foundation dedicated to preserving the historical events of George H. W. Bush's presidency, (not to be confused with his son, George W. Bush.) Charity Navigator says about 40% of donations go to meet overhead expenses.
- American Printing House for the Blind: The American Printing House for the Blind works towards helping visually impaired people lead more independent lives by creating product aids. Approximately 34% of funds go to administrative expenses.
- American SCORES: America SCORES uses soccer, combined with writing, creative expression, and service learning to support children in urban areas to reach their full potential. Their program is aligned with standards for English, service learning, and physical education. About a third of their funds go to administrative and fundraising expenses.
Higher Overhead Doesn't Always Mean You Need to Avoid a Charity
There are debates when it comes to the question of how much charities should spend on overhead. While it can be really powerful when charities can make an impact with lower overhead, there's more to consider about the operating costs.
The Nonprofit Leadership Alliance challenges the overhead myth, or the idea that low overhead automatically equates to a charity being effective. They suggest that "other factors such as program performance, governance structure, staff professionalism, fundraising efficiency, and other practices should be considered as part of the bigger picture."
Here are a few other things to keep in mind:
- Certain types of charities may have higher overhead costs than others, depending on the work they do and the programs they provide.
- Certain overhead costs can fluctuate from month to month.
- Some expenses for charities may increase, but they may not have a matching increase in donations.
- Sometimes charities with lower overhead are actually less effective. According to an 11-year study on charity overhead spending, an increase in overhead spending up to an optimal point led to an increase in the quality and outcomes of the programs.
When a charity invests in its resources and programs to be more effective, it can sometimes mean a better overall impact, even if the overhead isn't extremely low. Before you donate, look into various factors about the charity, not only its overhead spending.
Resources to Help You Donate Wisely
Like ordering a meal from a 10+ page menu, picking a charity to donate to can be difficult. This is only made harder by the complicated financial jargon and link after link you have to hunt through just to get to the truth. Fortunately, not only are there charity watchdog groups to help you, but there are questions you can ask before donating that'll help you make the best decision.
Charity Watchdog Resources
In addition to Charity Navigator, there are several other impartial groups that simply collect information and present it for donors' consideration. Any of the following resources is a good place to start when you're considering giving away your money:
- CharityWatch: The American Institute of Philanthropy puts out Charity Watch, a website that rates hundreds of charities on their financial dealings.
- GuideStar: GuideStar collects 990 forms and other public financial data for many charities. It also includes a community interface that lets you leave commentary about specific charities, so you can report any suspicious activity you see going on.
- Give Well: Give Well reviews hundreds of charities and also guides you on how to review nonprofits they may not have gotten to yet.
Questions You Can Ask Before Donating
The sheer volume of charities out there means that not every single one gets the deep-dive treatment from one of these watchdog websites. However, don't let that stop you from donating to potentially great organizations. You've just to do a little legwork yourself. Start by asking these questions before donating to a specific org:
- Is the nonprofit actually a charity? You can find this out by searching for its 990 form. This information is typically found on a charity watchdog site; however, you can also visit Give.org to see if they've filed anything for the charity you've got in mind. Note that religious institutions, such as churches and synagogues, typically do not have to file a 990.
- Are there complaints against the charity's practices? For example, does a hair donation charity collect hair for free and then charge recipients for the wigs made from it? Again, this information is found easily on Give.org.
- Do the charity's marketing materials include actionable measures? Be wary of charities who drone on about the problem they're trying to 'fix' but fail to back up their claims with any evidence of their programmatic successes.
- How much of the donations go directly to the charity? No charity can have 100% of donations go directly to the work — some administration costs are normal — but be careful about charities with hidden financials.
Donate With Confidence
Your money can make a difference, but it's good to be informed and know the ins and outs of a charity's spending before you donate. Make every dollar count by checking out potential charities and considering the different questions to ask. Then you'll be able to pick the right ones and donate with confidence.