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Where is Your Money Really Going When You Donate to Charities?

Where is Your Money Really Going When You Donate to Charities?

We see commercials and ads for charities every day.

Starving children, abused animals…you’ve seen them.

Have you ever questioned how much of your money was actually spent on helping?

And how much was spent on the charity’s employees? Or on that commercial?

You may have thought something along the lines of…

“Why didn’t they spend this money on feeding those children instead of paying for this expensive commercial?”

Let’s see what’s going on here…

Where Else Does Your Money Go?

If it doesn’t go to the cause, where does it go?

There is no simple answer to that question. It goes to many things.

Here are some of the expenses charities can have:

  • Admin costs
  • Advertising/marketing costs
  • Rent/lease payments
  • Utilities
  • Maintenance costs
  • Additional fees and costs (really specific, I know)

Some charities have the funds for their administration donated, which would cover practically everything mentioned above.

Charity Pie Chart

This means there are people who donate money specifically to cover the cost of the administration; therefore, 100% of the money you donate is going directly to the cause.

I think that’s pretty cool.

But, that doesn’t mean there aren’t good charities that don’t do this.

Let’s look at some of the more popular ones…

Popular Charities

How much do some of the more widely known charities use for administration costs?

These charities allocate a certain percentage of every dollar to direct aid. Some maintain the same amount at all times and others allocate 100% to direct aid during disasters.

Red Cross Dollar Distribution

This is the breakdown of how much goes to direct aid:

  • Feeding America (98%, 100% during disasters)
  • Feed the Children (92%)
  • The Red Cross (91%)
  • World Vision (85%)
  • The Salvation Army (82%, 100% during disasters)

Those are pretty good numbers. Though, all charities are not created equal.

How to Figure it Out

There are some great resources out there to figure out how different charities spend their money.

Use these websites to research and compare:

There are other sites around the web that offer similar information, but these two cover basically everything.

Overpaid Executives

Something else you probably hear about is the “outrageous” salaries that some charity executives earn.

The Red Cross comes to mind, since their CEO earns several hundred thousand dollars.

Overpaid Charity Executive

Those overpaid executives with their fancy cars guitars.

I’m not here to argue about how much is too much, I am here to suggest that you do your research.

If you think the employees deserve to earn high salaries, by all means, donate away. If you think they are overpaid, you should probably find another charity.

The point is that you may have some research to do.

If you haven’t started giving yet, do the research to find your best option. If you are already giving, figure out where your money is going.

There are too many charities and organizations out there to give to an inefficient one.

Final Words

It all depends on your views.

I know you want to make the most responsible donation possible, so you simply need to do some research on the charities you plan to work with.

Use the resources in this article. (Charity Watch and Charity Navigator)

You have thousands of options when giving, make it count.

Quick side note: This is the best series I have ever heard in my entire life on giving: Compassion by Command by Greg Boyd (Woodland Hills Church). You can download the entire thing for free if you follow that link. It’s heavy directed towards Christians, but everyone would benefit from hearing it.

Do you give regularly?

What is your favorite charity?

Share in the comments!

Photo Credit: Jesus Solana, Nicoli Paternoster

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My name is Kalen and I'm the founder and main finance writer for MoneyMiniBlog. I write short, sweet and simple articles on money and productivity. My awesome wife and I have 4 amazing children. I also serve on active duty in the United States Air Force. Feel free to ask me anything.

14 Comments

  1. I am always sure to check out charities before donating. There are some that have understandably higher administrative costs, and there is always going to be a cost to the charity for actually running it, but it’s nice to know where your money is going when you donate.
    Daisy @ Prairie Eco Thrifter recently posted…Could You Give Up Sugar?My Profile

    Reply
    • Hey Daisy,

      I agree, some costs can’t be avoided. Usually larger charities have higher costs, but I love that some have their admin costs donated.

      Thanks for the comment!

      Reply
  2. Hey, Kalen, are you a MN boy?? We went to Woodland Hills for several years!! Another thing I would point about about giving to charities is to make sure you know what they support behind the scenes. Often charities give their money to causes a person may not support, but don’t mention that openly. So, by supporting a certain charity, you may be supporting another organization that has contradicting beliefs to yours. Best to check out all charities thoroughly before you decide who to give to.
    Laurie @thefrugalfarmer recently posted…Prepping 101: Learn from the Past to Prep for the FutureMy Profile

    Reply
    • Wow, great point, Laurie! I forgot to mention that. Thanks for adding!

      You went to WH??? That’s awesome! I found Greg’s teaching online and through Christian festivals like Cornerstone. I have never actually been to WH, but I want to.

      I’m stationed in OK right now, so it’s a long drive sadly. Did you love it there?

      Reply
      • Yeah, when we were there (over a decade ago) we did love it there, but the Lord led us strongly to leave. We did so (even though we didn’t want to or see why at the time) and shortly after there was some pretty serious division in their church over some teachings of his.
        Laurie @thefrugalfarmer recently posted…Prepping 101: Learn from the Past to Prep for the FutureMy Profile

        Reply
        • I understand that. I think it’s great that you guys listened to the Lord against your own desires. I believe you’re talking about the Cross and the Sword series, where over 1000 people left the church. That was definitely a controversial series. It changed my way of thinking about a lot of things. It was a tough series to listen to, especially since I am in the military, but now it’s one of my favorites.

          That’s so great that you used to go there. What a small world it is! I’m looking forward to getting to know you better through the finance community!

          Reply
  3. I always thought that a higher percentage of my donations went to the cost of running a charity. It’s actually a breath of fresh air to learn that more of my donation dollars are being used to help than I originally thought. Thanks!
    Joshua R @ CNA recently posted…Has Spending Less Changed My Happiness Level?My Profile

    Reply
    • Hey Joshua,

      That’s awesome! I’m glad it helped! :)

      Reply
    • Hey! Thanks! I’m so happy that you have found them to be useful. I love using these sites to check out different charities and organizations. You picked a good one! I love Heifer’s mission!

      Reply
  4. Great post! I actually was completely unaware of these types of ratio’s until I did a organizational analysis of the Red Cross this year for a Business Policy class. It’s definitely something important to consider especially when you want your dollars to make the most impact.
    Lauren @ Cheapstudents.ca recently posted…College After University: A Few Things You Should KnowMy Profile

    Reply
    • Hey Lauren,

      Thank you! I used to be unaware as well. I remember the first time I figured out how much of the money was going to the cause, it was quite eye opening.

      Thanks for commenting!

      Reply
    • Thanks Bob!

      I appreciate that. You have some great articles on giving.

      Thanks for the comment!

      Reply

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