Charities With the Highest Admin Costs
A favorite saying in business is that you have to spend money to make money. Charitable organizations, on the other hand, have to spend money to give money, and it turns out that some are woefully inefficient at channeling donations to the people they're supposed to help.
The non-profit Charity Navigator Web site tracks such expenses via charities’ disclosure statements to the IRS to provide donors with an assessment of how well charities run themselves. Looking only at the supply side for the more than 5,500 charities that it tracks, the organization does not evaluate the impact on the recipients of funds, since that impact is often a subjective appraisal of "effectiveness." The statistics used in this list are from the most recent fiscal year's data on the Charity Navigator Web site at the time of publication.
Here are a few of my favorites of the top 20:
18. Gospel to the Unreached Millions (GUM)
Administrative expenses: 43.1%
Based in Houston, this evangelical ministryis one of the least efficient in translating donations into international programs designed to spread its spiritual message. With administrative expenses topping 43% and fundraising expenses more than 38% of its total budget, GUM was able to disburse a mere 18% of incoming money to the targeted recipients of aid in its last reported fiscal year, 2006. Managing a budget of almost $1.5 million, GUM has a poor track record of directing that cash to its evangelical programs.
Administrative expenses: 43.7%
Psychiatric evaluation and treatment are a big business in the United States, with new conditions being identified and monitored seemingly every day. The American Psychiatric Foundation, based in Arlington, Va., tries to improve the public’s understanding of mental illness and to advocate for early intervention programs and treatment services through grants, research funding and awards. The group, which is the philanthropic arm of the American Psychiatric Association, has received consistently low ratings for its high administrative costs, which consistently reach more than $500,000 annually.
Administrative expenses: 46.0%
Based in Phoenix, Arizona, VCLI is one of the smallest organizations on the list, as well as being one of the least efficient. With a budget of only around $100,000 in fiscal year 2007, the group spends almost half on administrative expenses stemming from the operational costs of running offices in Illinois, Alabama, Guatemala, and Cuba in addition to its headquarters in Arizona. The organization, founded by its charismatic leader Ray L’Amoreaux (whose $24,000 salary represented 2.24 percent of expenses in 2007), seeks to help churches further their efforts to recruit more committed followers of Jesus.
Administrative expenses: 47.4%
Changed Lives is a Christian organization based in Tennessee whose message of Biblical values is broadcast streaming over the internet to followers around the world. Carried by speaker Ben Haden, who began his broadcasting career at NBC in 1967, Changed Lives features video lectures on a number of spiritual topics and distributes Bibles and other religious literature for free to its supporters. While the organization’s revenues have increased over the last three reported years, its overhead has more than kept pace, pushing administrative expenses to over 47 percent of the group’s 2008 budget of around $790,000.
Administrative expenses: 48.7%
Another evangelical organization, Vision New England works with a network of over 5,000 churches to advance its goal of supporting and improving upon pastors’ efforts to increase bring more New Englanders to faith in Jesus. It does this through seminars and prayer groups throughout the region. The group’s $1.4 million budget in 2008 was significantly lower than the previous two fiscal years, but a significant rise in administrative costs during that same period brought overhead costs up to 48.7 percent of total expenses.
Administrative expenses: 68.0%
Topping the list of America’s worst charities is an organization that spent more than $1.6 million dollars on its administrative expenses in 2007, over twice what it spent the previous year. The American Tract Society, based in Texas, distributes religious literature to spread its message around the world. With a history of low ratings from Charity Navigator, the group’s administrative expenses have consistently outpaced the amount of donations coming in. While the group receives income from other sources than contributions, donors to the American Tract Society may be surprised to know that the recipient is the most inefficient in the country at maximizing the impact of its donations.
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