01/29/2013 08:05 EST | Updated 03/31/2013 05:12 EDT

How Much of What You Donate Actually Goes to Charity?


When you make a donation with your hard earned money, you want it to go to the cause. It is understood that some of the donation will be used for administrative costs and fundraising but one hopes that a large percentage will reach the people you intend to help. Unfortunately, that is not always the case.

Charities are a big business and this business is becoming more competitive and costly each year. There are over 85,000 organizations on the Canada Revenue Agency's Charities Directorate. They employ a lot of people to chase more than $8.3 billion dollars in donations as reported by Statistics Canada. All this costs money which is used to get donations and therefore cannot be distributed toward programs. For example, the Hospital for Sick Children Foundation had 10 people making over $160,000 per year and that's just the foundation, not the hospital.

Moneysense Magazine publishes a really good feature called The Charity 100 which ranks the largest 100 Canadian charities measured by totalling tax receipted donations and fundraising revenues. The table below, which is summarized from the Charity 100 data, shows the category of charities and is ranked by the averages of the percent of expenditures used on programs. Check out the Moneysense site for details on individual charities.

Religion -- 86.5 per cent

International -- 85.1 per cent

Art, Culture -- 80.3 per cent

Fundraising -- 79.7 per cent

Social -- 77.1 per cent

Animal -- 74.6 per cent

Environment -- 72.8 per cent

Hospital Foundation -- 67.3 per cent

Health -- 56.2 per cent

As you can see, the worst performers of the nine categories are heath and second worst are the hospital foundations. So considering you wish to donate to hospital foundations or charities focused on health, how can you ensure that more than 56 per cent of your dollar goes to the cause?

•Don't do charity lotteries if you want your money to be effective. While these draws do bring in tremendous amount of cash, very little filters down to programs. After costs, only 25 per cent of the Princess Margaret and 16 per cent of Sick Children lottery revenues were recorded as profit. These programs do add to the charity's revenue but at a high cost of maintenance. Also the lure of prizes like cash, houses, vacations and cars can entice a person who makes regular donations to switch over to lottery tickets which means less of their dollars go to the cause. Other programs like runs, galas, etc. also post low returns on your dollar.

•Don't reply to telemarketers or mail campaigns as there usually are high overheads on these fund raising vehicles. Often these campaigns are conducted by third parties who don't work for free so varying percentages of your donation will go to them before coming to the charity. Have yourself taken off the phone and mailing lists and donate to your favorite cause directly This will save money for all the charities who phone or mail you.

•See if the charity will direct your donation to where you want it to go. You may have benefited from the Cancer's Society's volunteer driver program and want your donation to go directly there to ensure it remains robust.

•Volunteer -- time is always more valuable than money. This way you are donating yourself as a valuable addition to a worthwhile cause. Good volunteers with strong skills are gold to charities.

Also see for further posts.

What To Donate?