Check charity before you give this season, watchdog says
Charity Intelligence Canada says some charities have more impact than others
With the holiday season approaching, many Canadians are looking to make a difference through their wallets with charitable donations made in their loved ones' names — but a charity watchdog says donor beware.
A March 2016 U.S. study revealed up to 15 per cent of cash donations are wasted by going to inefficient and poorly performing charities.
"I'm not surprised by this figure," said Greg Thomson, director of research at Charity Intelligence Canada — an independent charity watchdog.
"Most charitable giving in Canada is done without any examination of the real effectiveness of charities. Giving is very hit or miss."
Even though Canadians might feel overwhelmed by requests this holiday season, Thomson said, it's important to put some thought into your giving and donate to charities you feel really comfortable about giving to.
Although some donors look at overhead costs and salary when determining whether a charity is efficient, Thomson said this is the wrong focus.
"What matters is what is the charity able to accomplish with the dollars it receives," he said. He called this its "social return on investment".
"We try to put a monetary value on all of the change that the charity creates both for the client and society — saving health care costs, policing costs and so on. Then we divide this by the total cost to achieve these results, to give the measure of the social value created per dollar."
Most charities, Thomson said, are able to generate $1 to $2 worth of value for every dollar spent, but he said his group has identified a number of charities creating significantly more value — five to 10 times the value of a typical charity.
There are also a few charitable sectors that tend to create more social value than others, Thomson added.
These include charities working with troubled youth and food banks.
"[These groups] are not just helping them here and now, but helping them change the trajectory of their lives," he explained.
According to latest data from Statistics Canada, 24 million Canadians aged 15 years and older, around 82 per cent of the population, had made a monetary donation in 2013.
With files from Daybreak South
To listen to the interview, click on the link labelled Making the best donation this holiday season