Aiding the vanquished

How to donate to charitable-relief efforts in Iraq

By Andrea Coombes, CBS.MarketWatch.com
April 15, 2003

SAN FRANCISCO (CBS.MW) -- The invasion of Iraq is winding down, but the need for humanitarian aid is only just beginning. Yet not all charities are equally effective. Prospective donors need to consider where they choose to give their money, especially because the unfolding situation in Iraq means new, possibly unethical, organizations may emerge, experts said.

"There are some people who will take advantage of any crisis and create bogus organizations, and donors are quite properly concerned about that," said Suzanne Coffman, spokeswoman with GuideStar, a nonprofit that gathers and disseminates information on U.S. charities.

Even if a charity is ethical, it may not spend your money wisely. "When there is a new need created, especially in such a dramatic way as a war, there are more new organizations that will pop up," said Kendall Webb, executive director of JustGive, a nonprofit online donation site.

"Many will be very small, very new, they won't have a business plan ... it may be emotion carrying them," Webb said. "Even though they might have good intentions, they might not get the money to where they say they want to get it."

Donating to such a charity is "like making a bad investment," Coffman said. "You don't get the return on your philanthropic dollar that you might otherwise."

Relief efforts just beginning

So far, Americans have been focused more on the war than on relief efforts, in part because charitable groups, not having complete access to Iraq, have been unable to gauge the degree of need. JustGive has processed about $5,000 for a variety of organizations working in Iraq, compared to some $500,000 after 9/11, Webb said.

Agencies have also moved slowly on requesting donations because of their experience after 9/11, when some groups, most notably the Red Cross, were chastised for collecting more than they needed, Webb said.

Early requests for donations were based on initial estimates of fatalities and injuries, which proved to be lower than initially believed. "A lot of charities are cautious right now because they don't want to collect too much money," she said. Still, the level of donations to Iraq is growing now that some charities have gained access to the southern part of the country, Webb said. "But the peak will probably be in the next two months as the media exposes what the need is, and (charitable) organizations identify how much money they need."

Organizations "are also going to recognize the fact that the U.S. government and (other) humanitarian relief efforts aren't going to cover all the money that will be needed," she said. That's when agencies will start tapping Americans for help.

"The call to action will be high, but we have to wait for the media to bring that into everyone's homes. Right now, the media is focused on the war. The humanitarian relief effort is the next stage of what they're going to focus on," Webb said.

To give, or not to give

Those interested in supporting relief efforts in Iraq should do their charitable investment homework, experts said. There are some 850,000 nonprofit organizations in the U.S., with about 20 currently accepting donations for relief efforts in Iraq.

Choosing among them is, in large part, a matter of personal preference. "Every donor has specific needs," Webb said. "Some donors want to give to an organization that is small and therefore their donations will be used immediately and will have a big impact on that organization.

"Other people want to give to a very well-established, stable organization like a Red Cross where their donation is a much lower percentage of what that organization needs but they feel very confident that money will be used by a credible group. It's important for a donor to recognize what's important to them, and then look for that."

To help sort through your choices, consider the following:

1) Assess what type of aid activity you'd like to support. The possibilities range from emergency services for providing food, drinking water and medicine, to longer-term projects aimed at increasing the level of medical services, building schools, or helping villages become self-sustaining. You'll also need to decide between organizations that undertake many emergency services and those that focus on supporting only, say, providing medicine, Coffman said. Web sites such as GuideStar and JustGive provide information on agencies' goals. Prospective donors can also check agency Web sites.

2) Make sure the agency is specific about what it hopes to accomplish and what it's managed to do in the past. "Organizations that are doing good work usually can quantify that work," Coffman said. "As opposed to 'ease hunger,' (the agency should say) 'feed X number of people a day,'" she said. "Or, instead of 'improve literary in Iraq,' how about 'provide school materials to X number of villages or provide literacy training to X number of schools,'" Coffman said.

3) Assess the charity's financial health. There are a number of Web sites that post charities' Form 990, which details their annual financial picture. Look at the program's expense ratio to see how much of your donation will go to administrative costs versus program activities. However, be wary when comparing charities based on this number. The expense ratio "is certainly a legitimate thing to look at, but you have to compare organizations that do the same kind of work," Coffman said, noting that a medical-services provider in Iraq may have much higher administrative expenses than a food provider.

Also look at the charity's reserves. Excessive reserves mean the charity is sitting on money that, some say, could be better used for services. Others argue, however, that charities with reserves are being financially prudent. "Donors are often surprised that nonprofits have assets. Why aren't they spending every cent?" Coffman said. "They may get most of their donations at the end of the year, and the assets they carry over may be what keeps them going for the first three quarters of their fiscal year." If you're wondering why the agency has a lot of money in reserve, call the agency and ask why.

Web sites that provide charities' financial information and Web site addresses include GuideStar (www.guidestar.org), JustGive (www.justgive.org), Charity Navigator (www.charitynavigator.org), the American Institute for Philanthropy (www.charitywatch.org), the Better Business Bureau's Wise Giving Alliance (www.give.org), and Ministry Watch (www.ministrywatch.org), which focuses on Christian ministries.

4) If you have any lingering doubts, call the agency. "If I make a call like that I say, 'I'm thinking of giving to your organization but I have some questions,'" Coffman said. "That's another way to judge the agency: Are they willing to share that information with you? Most reputable nonprofits know that the tradeoff for being tax exempt is being open and accountable and being willing to explain to donors."

Said Coffman: "If you have any doubts and you don't want to spend all day making phone calls, find another organization that you feel more comfortable with, that you don't have questions about."

Andrea Coombes is a reporter for CBS.MarketWatch.com in San Francisco.