Once upon a time I knew some people who wanted me to help them set up a charity. They were smart enough to know that they could make a lot of money by establishing a not-for-profit organization that would pay them outrageous salaries.
They said that I could be the vice-president of the charity. While I respected their intelligence, I declined their offer. I decided that I wasn't as big a scumbag as they were.
However, they weren't the first scumbags earning big bucks from our charity contributions. The salaries that many heads of charity organizations take home are obscene. And that includes some of our most respected diabetes organizations.
With the economy in turmoil right now we have more reason than ever to weigh carefully who and what we support. But for years one of the questions that people with diabetes ask me often is which diabetes charity deserve their money.
I always start by telling them about potential conflicts of interest. Journalists call this "full disclosure."
During the past dozen years that I have been writing about diabetes, three of these organizations have paid me for articles or consulting. Between 1997 to 2003 I reviewed about 125 diabetes-related Web sites for the American Diabetes Association (ADA). I also wrote an article that the organization's magazine, Diabetes Forecast, published in its March 2000 issue. To date I have also written 25 articles for "Diabetes Wellness News" (formerly "Diabetes Wellness Letter"), the newsletter of the Diabetes Research and Wellness Foundation. In addition, I have consulted to the Joslin Diabetes Center on two contracts.
These are three of the most important diabetes charities. The other top organizations are the Juvenile Diabetes Research Foundation International (JDRF) and the Diabetes Research Institute Foundation.
We have several excellent ways to evaluate these groups. The evaluations all start with the income tax form that they have to file with the federal government. Even though they are exempt from income tax, the government requires that each of these organizations file a Form 990, "Return of Organization Exempt from Income Tax."
Fortunately for open disclosure, one website, GuideStar, scans in these forms and puts them online. They do analysis too, but, they charge a premium for the most relevant information that we need to evaluate diabetes charities.
One piece of that information is something that I referred to earlier -- how many of our dollars that the leaders of these organizations take home. Each of us can make a gut decision about how much is too much.
Two other criteria -- which may be even more important -- are the proportion of their budget that they spend on actual programs and services and how much they spend to get the funds they collect.
A different rating organization, the American Institute of Philanthropy, says that it thinks that we can reasonably expect most charities to spend 60 percent or more of what they take in on program services. AIP sets the bar for the cost of fund rasing at 35 percent or less.
While AIP doesn't make its ratings free online, I have at hand its May 2008 report. Based on the composite score of the diabetes organizations that it evaluated, it gives an "A" grade to the JDRF and an "A-" to the Diabetes Research Institute Foundation.
But I don't trust AIP's reports, since they give a grade of "F" to one organization that another evaluating site, Charity Navigator, gives top marks to. AIP seems confused about the Diabetes Research and Wellness Foundation's cost of fund raising. It says that it is 21 to 71 percent. That is just too large a range to be believable.
But Charity Navigator has the detail we need to help us evaluate these groups. Of funds that the Diabetes Research and Wellness Foundation raises, in fact 92.2 percent goes to program services and only 6.5 percent for fund raising. Its highest paid officer earned $93,221 in the most recent year for which data are available.
What does Charity Navigator have on the other top diabetes organizations?
The ADA by comparison puts 76.2 percent of the funds that it raises into programs, spending 20.2 percent of its income on fund raising. The ADA rewarded its CEO with a salary of $383,843 in the most recent year for which data are available.
The JDRF comes close to the Diabetes Research and Wellness Foundation in the percentage that goes to program services, 86.1 percent and in the small amount for fund raising, 6.7 percent. However, its CEO is certainly well compensated, taking home $616,875 in the most recent year for which data are available.
The Diabetes Research Institute Foundation has good fund-raising numbers too. Of the funds that it raises 83.2 percent goes to program services and only 11.1 percent to fund raising. Its CEO did earn a handsome $446,373 in the most recent year for which data are available.
The Joslin Diabetes Center used 80.2 percent of the funds raised for program services and only 4.9 percent for fund raising. Great numbers. But it also paid its top people awfully well, one of them taking home $660,569 in the most recent year for which data are available.
By far the worst of these organizations in terms of these numbers is the Defeat Diabetes Foundation. On this, the American Institute of Philanthropy and Charity Navigator agree. Only 28.8 percent of what it raises goes for program services. A whopping 62.7 percent goes for fund raising! The president pulls down a relatively modest $75,600. However, the treasurer, who has the same last name, pulls down exactly the same amount.
These are the main diabetes organizations. But not the only ones. When any of them come calling, you can tell them that you will look them up and make a rational decision.