Higher Rock Education - Economics Blog

Friday, September 08, 2017

Which charities use your donations most effectively?

Hurricane Harvey hit Texas August 25th as a Category 4 storm, with wind surges up to 130 mph and dumping over 50 inches of rain in some neighborhoods. On September 6th, NBC reported that the death toll has climbed to 70. Streets were not recognizable as hundreds of volunteers used boats to rescue many. Short-term needs include clean drinking water, food, shelter, emergency treatment, and much more. Animals also require attention. There are also long-term needs. Digging out will take years as people struggle to put their homes back in order or restart their businesses. Money is desperately needed to help people rebuild their interrupted lives. Sadly, it is likely many of the same pleas will be heard from victims of Irma in a few days. But where to give? What charities are the most efficient?

As an economist and businessman, I want to invest my money wisely, and this includes the money I give to charities. Like businesses, charities have different objectives, and not all charities use money efficiently. Some have a high overhead. Others may pay large commissions to fundraisers. Charity Watch and Charity Navigator are nonprofits that review and grade hundreds of charitable organizations, including many that serve Hurricane Harvey’s victims. Charity Navigator lists 48 organizations assisting the Texas Gulf flood victims. Charity Watch only includes 18. Charity Watch uses a letter grade, while Charity Navigator uses stars.

I have compiled a list of their highest rated charities. My list only includes those charities graded A- or better by Charity Watch and have a four-star rating by Charity Navigator. Exceptions include several local charities that are highly ranked by Charity Navigator, but not included on Charity Watch’s list. Several links are provided for each charity. Click the charity’s name, and you will be sent to the charity’s home page. Click the rating and you will be taken to the rating agency’s analysis of that charity.

Charity Charity Watch Charity Navigator
All Hands Volunteers A+ ****
Catholic Relief Services A+ ****
Direct Relief and Direct Relief Foundation A ****
Episcopal Relief and Development A ****
Operation USA A- ****
Samaritan's Purse A- ****
United Methodist Committee on Relief A+ ****
Catholic Charities of the Archdiocese of Galveston-Houston
Houston Food Bank ****
United Way of Houston ****

Perhaps you have a passion for horses and want to help them – or you want to target rebuilding. These web sites list many more charities that focus on a given objective. I encourage you to visit Charity Watch or Charity Navigator’s web site and look for a highly rated charity that serves your passion. I have bookmarked their sites to refer to when considering my future giving.

Americans are trusting and generous. Providing credit card information to crooks will only harm you and not help those in need. Be careful and do your homework. Charity Watch recommends avoiding phone and email solicitations. They warn on their web site,

People need to be on guard concerning the surge of solicitations related to any highly publicized crisis. There will be fraudulent charity solicitations, some involving websites and email links attempting to steal your credit card information for identity theft or insert malware on your computer.

Social media will include many fake victims. Do not donate to unknown individuals that purport to need aid that post on Facebook, GoFundMe, Generosity by Indiegogo, etc. These may be fraudsters, and even if they are legitimate victims, they may receive an unfairly large amount of aid.

Giving is a gift. Give wisely!

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