#AceFinanceNews- USA:Dec.27:The American Red Cross regularly touts how responsible it is with donors’ money. “We’re very proud of the fact that 91 cents of every dollar that’s donated goes to our services,” Red Cross CEO Gail McGovern said in a speech in Baltimore last year. “That’s world class, obviously.”

McGovern has often repeated that figure, which has also appeared on the charity’s website. “I’m really proud” that overhead expenses are so low, she tolda Cleveland audience in June.

The problem with that number: It isn’t true.

After inquiries by ProPublica and NPR, the Red Cross removed the statement from its website. The Red Cross said the claim was not “as clear as it could have been, and we are clarifying the language.”

The Red Cross declined repeated requests to say the actual percentage of donor dollars going to humanitarian services.

But the charity’s own financial statements show that overhead expenses are significantly more than what McGovern and other Red Cross officials have claimed.

In recent years, the Red Cross’ fundraising expenses alone have been as high as 26 cents of every donated dollar, nearly three times the nine cents in overhead claimed by McGovern. In the past five years, fundraising expenses have averaged 17 cents per donated dollar.

But even that understates matters. Once donated dollars are in Red Cross hands, the charity spends additional money on “management and general” expenses, which includes things like back office accounting. That means the portion of donated dollars going to overhead is even higher.

Just how high is impossible to know because the Red Cross doesn’t break down its spending on overhead and declined ProPublica and NPR’s request to do so.

The difference between the real number and the one the Red Cross has been repeating “would be very stark,” says Daniel Borochoff of the watchdog groupCharityWatch. “They don’t want to be embarrassed.”

Charities are closely scrutinized for how much they spend on overhead rather than programs that serve the public. Studies show that donors prefer to give money to organizations that spend more of their money on services. While there is a debate about the usefulness of overhead spending as a measure of performance, charities regularly celebrate having low figures.

The 17 percent the Red Cross has spent on average for fundraising expenses is below the ceilings set by nonprofit watchdogs. The Better Business Bureau Wise Giving Alliance, for example, says that fundraising expenses should not exceed 35 percent of related contributions.

McGovern, a former Harvard Business School marketing professor, has facedcriticism within the Red Cross for a focus on branding over delivery of services. ProPublica and NPR recently reported that Red Cross officials on the ground after Superstorm Sandy saw disaster relief resources diverted for public relations purposes. The charity has also been facing deficits and layoffs. As a result, McGovern has been pushing to increase the Red Cross’ annual fundraising.

The incorrect 91-cent figure has been used by McGovern in at least four speeches and written statements since last year, and other Red Cross officials have used it repeatedly to potential donors around the country.

After being contacted by ProPublica and NPR, the charity changed the wording on its website to another formulation it frequently uses: that 91 cents of every dollar the charity “spends” goes to humanitarian services.

But that too is misleading to donors…………. more ..



#charity, #donations, #donors, #spends

BRITAIN: ‘ Tories Bedroom Tax Show Increase in Rent Arrears Cases ‘

#AceDebtNews – BRITAIN – October Debt and benefit issues remain the highest areas of demand for the Warwick district’s Citizens Advice Bureau branch but the need for unemployment and housing advice is also increasing.

The charity, for which its volunteers provide specialist help and advice for people with a variety of problems, has released its annual report which will be presented for approval at the annual branch meeting next week.

In the last 12 months the branch dealt with 5,865 debt issues, 4,817 welfare issues and, 1,898 unemployment issues.

Aidan Knox, branch manager, said: “One of the key issues for the people of Warwick district is affordability and we are advising more people who are in work yet unable to make ends meet than ever.

“Affordability not only impacts on the need for debt advice but on housing security too. Over the last year we have been advising on average three people per week with some form of housing repossession action taken against them.

“Affordability, or the difficulties people are facing trying to achieve it, is one reason we are increasing the work we are doing in helping people save money and reduce costs. This includes helping people research their options to change energy suppliers, be savvy bargain shoppers and budget more effectively and many other areas of money saving help.”

Paul Hobday, a money advisor for the branch, said the downward pressures on incomes have led to many working families struggling to meet basic household expenses and so arrears for priority bills such as utilities are now more common than ever.

While a rise in mortgage interest rates could also provoke a significant increase in repossession proceedings client problems have also been compounded by the ‘bedroom tax’, which has led to an increase in levels of rent arrears over the last 12 months.



#bedroom-tax, #britian, #cab, #charity, #unemployment, #volunteers, #warwick, #warwickshire