February 10, 2023
Every now and then, a charity misbehaves. In Canada, there are over 86,000 registered charities (according to the Canada Revenue Agency). There are approximately 1,500 revocations annually, with 900 of those being revoked at the charity’s request (perhaps they wound down). Almost 600 of those being revoked were as a penalty for failing to file their T3010 on time (one would assume that they would reinstate their charitable status in due course). That leaves approximately 50 charities out of 86,000 that had their charitable status revoked. That is about half of one tenth of a percent!
So when a charity does something untoward or shady, it is instantly media fodder. I immediately think of the WE Charity scandal (in Canada) — that occupied the press for months on end. Most recently, there is a scandal around a Ukraine-based charity and not delivering proper goods to its Ukranian destination as promised.
Donors who support charities do so with of a basic level of trust. There is an assumption that the charity will act honorably and honestly. When that isn’t the case, it erodes the donor’s trust for all charities. Even though the bad actors represent half of one tenth of a percent of the charities, when dealing with mistrust, we paint all charities with the same brush.
According to give.org, only 20% of donors declare a high level of trust in charities. My hypothesis is when the media focuses on these bad players (as mentioned above), donor trust is further eroded. Here, the media is not a friend of the nonprofit sector. The media needs to survive by selling advertising, etc. By reporting on these sensational outliers with shocking headlines, it achieves their goal of selling advertising. Nobody wants to read that everything is going according to plan — it’s boring! Mostly, however, the media is usually an ally for nonprofits.
Do some charities act unethically? Definitely. Should we investigate more charities for potential mismanagement? Definitely. But, as a whole, the industry is acting ethically and within its stated mandate. Interestingly enough, I wrote an article (almost 1-year ago to the day) about the fact that you can always find a reason to not donate to a charity. The crux is to find the good. If you want to support the Ukrainian people and the charity mentioned above doesn’t install confidence in you, I am sure there are other nonprofits that will have a similar mandate.
That being said, you may have found yourself to support a charity that you thought was ethical, but, as it turns out, was not. You can do as much due diligence as you can, but every now and then, you make a poor investment (just like in the stock market). Your heart (and pocketbook) were in the right places. Take your licks and keep going.
Until next week.
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