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Vogel: Smart Philanthropy

For many of us, December is the month when we make the majority of our philanthropic donations. Nonprofit organizations know this and flood our mailboxes with their appeals for money. We want to help, but we worry that if we give to the wrong organization it will trigger a barrage of appeals from similar organizations. We also worry that most of our money will not be well used and will wind up in the hands of professional fund raisers.

A recent report from Vermont Attorney General Bill Sorrell shows that on average, 70 percent of the money raised by professional fundraisers for Vermont charitable groups goes to the fundraiser, and only thirty percent goes to the nonprofit. So it’s easy to become cynical.

On the other hand, the needs that nonprofits try to address are critical. A recent study by the Vermont Community Foundation found that one in four Vermonters are not earning enough to make ends meet. And one in five Vermont families pays more than 50% of their income for housing.

As a society, we ask nonprofit organizations to deal with difficult and important issues like depression, drug addiction, pre-school education, homelessness and hunger. So how can you insure that most of your dollars benefit your community?

First, be careful of phone solicitations. Attorney General Sorrell says that when he gets a phone solicitation, he always asks whether they are working for a paid fundraiser. Under Vermont law they are required to disclose this information.

There are also some reliable intermediaries you can use to help you screen and choose the best nonprofit organizations. The United Way sends volunteers to monitor all the nonprofit organizations they support. When you see the United Way symbol on an organization’s website it's always reassuring.

I also recommend the Vermont Community Foundation website. There, you can find out which nonprofit organizations the Foundation supported last year. And you can even look at the grants they made in specific categories like Food and farm, Disaster relief and the empowerment of women.

It would be nice if nonprofit organizations didn’t have to spend so much time and effort raising money and if we didn’t have to do this extra due diligence. But until we find a better system for creating a social safety net and solving society’s problems, we’ll have to put up with lots of fund raising letters and use some common sense to avoid those appeals that try to take advantage of our altruism.

John Vogel is a retired professor from the Tuck School of Business. His tenure at Dartmouth began in 1992, where he taught Real Estate and Entrepreneurship in the Social Sector, among other subjects. He was named by the “Business Week Guide” to Business Schools as one of Tuck’s “Outstanding Faculty” members.
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