Text Message Charities a Corporate Scam?

I, as do many of you, feel an obligation to help my fellow Man from time to time in their hour of need. Whether it's within our families, our local communities or helping those across the globe, service to others in any shape and form is inevitable throughout our time on Earth. When devastation hits parts of the Earth far from our homes, we tend to give to charities to play middle-man between ourselves and those in need. In the age of high-tech gadgets and the ability to instantly communicate, text message donations have quickly become a convenient way to reach across the globe and collect money from those who see fit to donate.

But in my opinion, all is not as it seems. The heart-felt assistance to those in need do not make it to the needy without passing through the hands of many organizations that see fit to extract absorbent fees and profit handsomely before the aid ever reaches the intended recipient.

To clearly see how this works, we must follow the money...beginning to end! But before we do that, I want to make sure those reading this understand that I realize that these people must make a living. It takes time and money to organize these efforts. Costs must be covered and bills paid. My intention with this thread is to show that these organizations do much better than we expect, and there are many people in line to take a small cut before the money goes to those who need it most. So lets begin....

Let's pretend a natural disaster occurs somewhere in the world. With widespread destruction and people either killed or misplaced from their homes, it is obvious that aid will be needed to help these people. Charities begin campaigns to raise money for that cause in various ways, but we are going to concentrate on text fundraising. The charity will then contact a mobile fundraising provider to setup the program. When everything is in order, the money begins to flow.

First link in the chain is the donor. Everyday people like you and I feel the need to help in whatever way we can, in a convenient, timely manner, and so when we see the calls for aid it is very easy to text #xxxxx to #xxxxx and donate $10 to the cause. This donation is simply added to our monthly phone bill. No muss, no fuss. Our part is done.

The next link is the cell phone companies. The cell phone companies are the required to pass the funds along to the Mobile fundraising organization hired by the charity, such as Mgive, the Mobile Giving Foundation and many more. But it is not quite that simple. The cell phone companies, although they are very careful to pass as much as they can to the large, well-known charities such as the Red Cross and Salvation Army to ward off bad publicity, are notorious for skimming as much as 20% from the collected funds for "fees and services". On top of that, they are allowed to charge their regular text message rates. So hypothetically speaking, the $10 has now become $8.

But this can take quite some time to make it's way to the next link in the chain. Some cell phone providers hold onto the funds for up to 120 days, which is long after the time when the people in need require assistance the most. Right away! The American Institute of Philanthropy is quoted as saying :“A charity will generally receive your donation faster if you mail a check or donate directly to the charity online using its secure web site." Needless to say, the second link in the chain muddies the waters right off the bat. But let's move on....

The next link is the Mobile Fundraising Providers. (Mgive, Etc.) For a charity to implement a text donation option, these services are coordinated and assisted by these Mobile Fund raisers. Right of the git-go, a charity must "purchase" a fundraising plan from the providers. In some cases it can cost as much as $800 a month just to provide the service. (This fee is paid by the charity and only comes into play later on.) They may also be required to pay one-time setup fees around $500 to get the plan rolling, along with the monthly charge. In this plan, the charity is also allowed to text volunteers and donors through text messaging. The number of outgoing texts the charity is allotted depends on the package they decide to purchase. If they happen to go beyond that allotment, they can be charges as much as $.05 for each additional text, further dwindling the available funds. But they are also able to charge a fee of up to $.35 for EACH donation....and then extract a fee of up to 3.5% from that same donation.

Similar to the CEO's of the cell phone companies and the char ties as well, the Executives at the Mobile Fundraising Providers such as James Eberhard of Mgive are multi-millionaires. And it's east to see why. We have not even talked about the fees taken by the charities, and now the $8 passed along by the cell phone provider has now become, at best, $7.30!

Now we come to the last link in the chain before the money hits those in need. For the most part, charities pass along all of the funds minus operating expenses fundraising costs. Hopefully I was able to show you that these operating expenses can be extremely high for any charity, and even devastating for a smaller charitable organization. Included in these costs is not only the cost of the products, transportation of volunteers (and it is important to remember that many of these charities use free labor to conduct aid missions and much of its fundraising) and the biggest dip......CEO pay!

The average CEO compensation in 2008 was approximately $250,000 for a larger charitable organization. This number is quite large, but it pails in comparison to the pay that many of the large charities give their top leaders. Some charities pay anywhere from $500,000 to almost a $2.75 million! Needless to say, the operating expenses of these charities can be unreasonable. After all the bills are paid, the charity only disperses at best 80% of the funds collected from the Mobile Text Fundraising Provider. I have seen some as low as 50%. So if we go with between those two numbers, and average it out at 65%, our $7.30 has now become $4.75! Even at 80% that $7.30 becomes $5.84!

$5.84....out of a $10 initial donation. I understand that this is all based on averages, but I hope you can see that with the "operating costs" of all the organizations involved, including the outrageous CEO compensation amounts, text donations alone are being stripped of at least half of its original amount. The kindness of those who find it necessary to give what they can to those in need are being used to create millionaires in the fundraising industry. The people at the end of the chain not knowing what they are losing out on, and a complete fraud being perpetuated on us all.

I leave you to make your own conclusion and please correct me if my math is wrong or if I misunderstand any link in the chain. But I have to say that this looks to me like just one more scam on the people who give, because they care. At best, I hope I have made you think twice before you donate through texts, and I hope you do your homework before you give to just any charity.

Thanks for reading!
Wikipedia
Gaurdian
MSNBC
MGive
2010 CEO Compensation Study
CEO Pay Charity Watch-AIofP

reply to post by sheepslayer247
Thank you for the heads up,they don't make enough money so they have to make money off of other peoples misfortunes.They have no shame!

reply to post by TWILITE22

They have no shame and they have no one to call them out on this!

We just assume that all is well, but we do not delve into the regulations and requirements that allow this to happen. There must be a better way to help people in need!

reply to post by sheepslayer247

Unfortunately there are not always a lot of obvious alternatives. If I choose to enter into an agreement whereas I already understand that 20-50% of money I contribute will be used for miscellaneous and/or copious at best expenses, I may still make that decision. at least I can be relatively confident that much will reach the end user I intended it to go to. If I do not give anywhere, I can be certain that nothing will get to the needy.

An analogy: I once asked my 10 year old daughter (at that time) if she understood why I gave money to a beggar at the street corner. After explaining to her my concerns, in as close to children's terms as I could muster, that the money may be used for the guy's booze or to pay for a new Cadillac hidden around the corner I asked her opinion on how to discern the needy from the shifty.

Without pause she told me I had to give to all of them, and always give the same amount. In her completely innocent mind she realized that if I used the faulty logic of the human condition, I exposed myself to errors. Possibly, I could only give to the worst offenders while I used my judgement ot screen out those that truly needed the help and had swallowed their ego and pride and stood at the street corner in their best effort to support themselves or those they loved. The ONLY WAY to be sure that the needy would benefit from my contributions was to treat all equally and give equally., I could not decide to not give for the same reason. I would always know that I left someone out there without benefit of sharing the blessings I enjoy and can spare.

Now I carry a set amount in cash with me wherever I go, and I never, ever fail to even go so far as to chase someone down who did not see me but is asking for help. Maybe they didn't see me, but I saw them.

Last a very short note of unsolicited advice: be careful when considering giving more than you can afford to. I learned the hard way a long time ago that you have to take care of yourself or you will never be able to help anyone else. Sometimes you may feel the tug to give more than you own, and sometimes that can be the right call. At that point I simply hope you have your life right with God, and follow His lead.

Best to all......

reply to post by samstone11


Great addition to the thread, Sam!

Sometimes I guess there is no way of knowing if your donations are going to help those in need, or pad the pockets of someone who doesn't need it at all. But I try to take a more proactive approach in how I decide who gets my money. For the most part I almost always only give locally. That way I can actually see, or take part in how the money is spent.

If I give to an organazation that sends aid overseas or in another state, I will only give to those who have a great reputation and pass along the most money they can, while keeping costs down. Like I said, I understand that 100% of the money will never make it through the process.

I would never put myself and my family in a bad position to help someone else out. I do go to extreme lengths to help my family around me (IE Mother, Brother, etc) but that's familay....and they would do the same for me!

The point of this thread was just to get everyone to second guess that easy text donation. I believe it is a complete sham! But please keep giving locally and elsewhere if they are trustworthy.

Your assessment is pretty much the way it is for the top charities. The little guys that don't have the overhead for staff and CEO generally get left out of the donation loop. What some of the charities pull in on a yearly bases would keep us in the field doing what they only say they do for years.

So we do things differently, we take what we earn from our labors and go out and do the work ourselves. We prefer to spend our money on rice, clothing and materials than advertising, begging for funds. No one gets paid in the organization and that means NO one.

Can you imagine how much rice $2.75 million will buy and how many mouths it will feed? For the same $10 that that the OP mentioned given by text message donation, could have fed a family of four with rice for a month. However it was reduced to $4-$5 and change and lined someones pocket. Looking at the family of four, that means that they would have to go hungry for two weeks so that someone else can get rich.

It is good that the OP has put forth the effort to point out where many a donation ends up and its not where it was said to have gone.

reply to post by pstrron


I think you understand exactly what I am talking about. The average, middle class or poor people donate what they can to help those in a worse situation then themselves and instead of the money being taken and applied to the "cause", it is used to make other people rich beyond what most of us could ever dream.

$10 may not amount to too much, but multiply that by millions of donations and it's easy to see the aid we could really give other people and nations. But others have to take their cut first.

It's a complete sham!

Bump

reply to post by sheepslayer247


Yes I do understand and it rubs me wrong to no end. Calling it a complete scam is putting it mildly. Granted there are some costs that you just can't avoid but they need to look up the word charity. Might I suggest looking it up in Old English so that they get a better understanding than the gutted modern day version.

Granted we could affiliate with the major charitable organizations but we do not trust them. We put the goods physically into the hands of those in need. If a church or village leader takes possession of the items, they sign for them and are photographed. We take accountability seriously, people expect their donation to go where stated and to do what is said. Now if the major charities did that and cutout the paid CEO/staff, a lot more people would have something to eat tonight and a shirt on their back. Can't see that happening anytime soon.

The OP math is faulty. The CEO pay is from the original 20%. The $7.30 is, most likely, the accurate amount for most legitimate charities. If you facilitated vital good works, how much would you charge to keep your organization going? Keep in mind that when water is sent via aqueducts, there is evaporation (and the same goes for money when it changes hands).

However, my personal thoughts, and in keeping with the idea of giving to beggars, are that we should only give to whom we know, and distribute to strangers through organized charities which make a concerted effort to, generally, know the recipients of their works/gifts. Regarding social emergencies, monies should be donated as directly as possible to local organizations, while the large "The False Shepherds who are disconnected from their Sheep" type organizations should be ignored (unless otherwise necessary - but I can't think of an example at the moment).