With Charity for All: Why Charities Are Failing and a Better Way to Give Kindle Edition

Stern served on the board of a large non-profit organization so he has plenty of (successful) first-hand experience in this area. Right there, that makes his book worth my attention.

On the good side: Stern makes many cogent points:

The true customers of a charity are the donors, not the beneficiaries. Charities will do whatever impresses donors. Research shows that most donors do very little research; therefore, many charities focus on beautiful stories ("help this person in the photo!") rather than actual measured results ("we spent $X million dollars per year, and 5 years later, Y thousand people were vaccinated / had high school degrees / had clean running water in their homes / had visited our clinic"). There is a very clear message to donors here: you're the customer; it's up to you to figure out what you want and then direct your money accordingly.

There are very few -- perhaps just one -- organization in the world that credibly evaluates the performance of charities. That's givewell.org . If nothing else, check the charities that you know on givewell. You'll be surprised.

The Gates Foundation also does this kind of evaluation for its own use but does not publish reports for others.

Donors should think carefully about what they want and think carefully about how to tell if they are getting it.

One traditional measure of charitable effectiveness is %age spent on program services. To be sure, a charity that spends 20% of its revenues on program services and 80% on paying its own executives and other overhead is likely to be an ineffective charity, so this measure helps weed out a few bad charities. However, the difference between a charity that spends 75% on program services and another charity that spends 95% on program services isn't going to be visible by looking at those two numbers. It's likely that the second charity is not spending *enough* on institutional development. How much is enough? It's not a percentage, it goes back to measuring outcomes -- whatever produces the best outcome.

On the down side:

Stern starts the book with a warning about using anecdotes as a way of making judgements, but then fills most of the rest of the book with anecdotes. And they all line up nicely, too. When Stern introduces an executive as friendly, personable, and exuding "boyish charm" -- that turns out to be a good charity. When Stern doesn't say anything about the personal attributes of executives -- that turns out to be a bad charity. Similarly, there's a bias against certain charitable areas (sports, high art) and in favor of others (social service). How about an effective sports charity or an ineffective youth service charity for a change?

Stern chastizes donors for being unfamiliar with the tools available, but then (a bit smugly) assumes that all his readers are familiar. This book could use an appendix of resources: how to look up the Form 990 of a charity. How to read the Form 990 of a charity. The address of Givewell. The address of any other services which publish comparable information.

Excellent vantage point on how it is possible to give wisely, demand results (no matter what those results are) and disseminate that information for better utilization of future funding dollars, with measurable results. Building stronger nonprofits - that succeed - work for the betterment of all of us, our society in general, and reduce societal problems. Good reading, important resource, recommended for anyone interested in non-profits and positive change.

This book covers - warts and all - the many problems with U.S. charities. The reality is while the vast majority of charities have good intentions, many fail to solve the social problems they are intended to address. And more than few are simply fraudulent organizations, taking advantage of lax legal over-site to bilk contributors.

A number of high profile examples of failed charities are examined. Examples include water charities that drill wells in Third World countries but are then unable to maintain them; the much denounced D.A.R.E program that still gets millions in funding despite proof the program doesn't work; and the many failings of the American Red Cross.

The book is at its best talking about the problems with charities. It's weaker when talking about how to fix them. It does have some great advice to donors:

“The public must begin to see donations as investments ... people must take charitable giving as seriously as they do investing in the stock market. This is the critical first step toward creating a new market discipline, a new culture of effectiveness, and efficient, results-oriented service.”

Have you ever asked yourself the true motive of your donations? How many donors give only out of good will and to advance a worthy cause? How many, particularly the wealthy, give to advance their names and achieve personal recognition, and how many donate only to take advantage of the tax breaks? How many of us are leery of giving to an organization that we know is distributing only a single digit percentage to the intended cause? Ken Stern's book, With Charity for All, provides some insights into those questions.

In the introduction to his book, Ken Stern says, "This book is not my story. This is a story about how the charitable sector lost its way." He backs up his statement with more than a hundred pages of decriptions of dozens and dozens of charities that have harbored unreliable and sometimes unethical chairmen, or charities that were developed by leaders with good intentions who, through lack of organization, failed in their objectives.

He covers all categories of charitable organizations: colleges, churches, athletic programs, music and arts, health, federal government programs, Salvation Army, the USGA, the D.A.R.E program, hospitals, college bowl games, and others too numerous to mention.

He cites examples of the rich and famous who were involved, positively or negatively, with the growing charitable foundations: John D. Rockefeller III, Andrew Carnegie, T. Boone Pickens, the Vanderbilts, Warren Buffet, Bill Gates, Joan Kroc...on and on.

All taxpayers know that whether you contribute $500.00 or 5 million dollars, you are allowed a tax deduction. With over 1 million tax exempt charities in the US today, the "understaffed" Internal Revenue Service enacts the laws of charitable tax deductions without question or investigation. In Ken Stern's words: "Government's current ability to regulate charitable activity is limited not just by unclear law but by lack of resources..." He also states: "The absence of clear rules and marketplace data, and terrific opportunities for brand confusion, mean that many charities live in a quasi-lawful zone, distributing some minimal amount of funds to recipients but directing a far greater share of the proceeds to management and expenses of fund raising."

Ken Sterns ends his book on a positive note. He gives an example of a reliable, strong charity group, and writes of his hopes for a brighter future for the "American charitable system." His viewpoint is written, not to give advice on where you should spend your money, but to share facts to help you make your own decisions. Read the book to learn his views.