5 Charities You Want to Avoid

BOSTON ( TheStreet) -- The holidays are the season of giving -- but experts warn would-be donors to make sure they don't get taken by questionable charities this time of year.

"Sadly, it's the Wild West out there in the nonprofit sector," says Sandra Miniutti of CharityNavigator.org, a nonprofit site that rates charities. "With 1 million U.S. charities and not a lot of laws on the books, it's 'donor beware.'"

Each year, CharityNavigator analyzes some 6,000 nonprofits' Form 990 financial-disclosure statements to see how much each group uses for good works compared with how much they spend on fundraising expenses, CEO pay and other overhead. The website's conclusion: Some nonprofits spend virtually every dime they raise on telemarketing firms to hit consumers up for money by phone.

Telemarketers often get a huge cut of your donation -- with as little as 4.4 cents of every $1 given ultimately going to good works after the charity deducts for other expenses, Miniutti says. That's a far cry from the 75 cents or more that she says well-regarded nonprofits earmark for their stated missions.

"These are charities you want to avoid," Miniutti says. "I think any donor who knew how little of their donation actually went to the group's stated mission would never give in the first place."

Unfortunately, questionable charities often focus on issues "that tug at the heartstrings," Miniutti says. "'Help sick kids,' 'Help your national military heroes,' "Help your local police.' How can you say no?"

Here's a look at the five nonprofits CharityNavigator found spend the highest percentage of their donations on professional fundraising fees. All figures are based on CharityNavigator's analysis of the latest available Form 990s filed with the U.S. Internal Revenue Service.

Miniutti says there's no evidence any of these five groups are breaking the law.

Operation Lookout National Center for Missing Youth
Money going to professional fundraisers: 84.2%

This group gets a zero-star rating from CharityNavigator primarily because the nonprofit's latest Form 990 indicates that the nonprofit spends nearly 85% of its budget on professional fundraising.

Only 9.8% goes toward the charity's stated mission of publicizing photos of missing kids and otherwise helping lost children's families, according to CharityNavigator's analysis.

Operation Lookout also gets an "F" from CharityWatch.org, while this month South Carolina's secretary of state included it on an annual list of charity "Scrooges."

Operation Lookout co-founder Melody Gibson says her group ran its own telemarketing unit for three years rather than pay third-party firms, but found it didn't save any money.

"While it increased cash flow, it did not reduce expenses and it didn't increase our productivity," she says. "It is misleading by watchdogs not to view this perspective."

Operation Lookout sees 37% of what it pays telemarketers as an educational expense rather than pure fundraising, Gibson says. Telemarketers publicize Operation Lookout's website, ask consumers to display posters of lost kids and otherwise promote the group's activities.

Consumers who don't want telemarketers to get a large chunk of their donations can simply give money directly to Operation Lookout via a PayPal link on the group's website, she says.

Firefighters Charitable Foundation
Money going to professional fundraisers: 85.4%

This charity, run by former New York Yankees slugger Frank Tepedino, gets zero stars from CharityNavigator primarily because it spends more than 85% of donations on professional fundraising fees.

Just 7.7% goes to the group's stated mission of providing $500 to $1,000 and free hygiene kits to fire victims, as well as small grants to volunteer firefighting companies, fire-prevention educational efforts and the like.

CharityNavigator has given the Firefighters Charitable Foundation 11 zero-star ratings in the dozen times it's reviewed the group since 2002, while CharityWatch grades the nonprofit as an "F." Missouri Attorney General Chris Koster included the foundation on a list of "15 Worst Charities" that he issued in 2010.

Tepedino admits his group does use high-cost telemarketers for fundraising, but says the nonprofit has no other option.

"We can't hire people to do in-house telemarketing, we have to hire professionals," he says. "We don't have the equipment, we don't have the rooms -- we work off of $10 to $15 donations and we don't get any grants or anything like that."

The ex-slugger adds that the foundation does other forms of fundraising in-house.

For instance, Tepedino said his group took in some $20,000 to $25,000 at a New York fundraising dinner recently, "and we'll give 100% of that, other than some administrative expenses" to those in need.

The Committee for Missing Children
Money going to professional fundraisers: 86.7%

CharityNavigator has given the Committee for Missing Children a zero-star rating out of a possible four stars all eight times it's reviewed the group in the past seven years. Similarly, CharityWatch gives the committee an "F" and Missouri's attorney general included the group on his 2010 list of worst charities.

The committee, which didn't return calls seeking comment, posts photos of lost kids on its website and provides other resources for parents. But Miniutti says the group spends almost 90 cents of every dollar it collects on professional fundraising fees. Just 11.1 cents go to actual charitable endeavors.

Cancer Survivors' Fund
Money going to professional fundraisers: 89.2%

This charity claims to provide college scholarships, prosthetics and counseling to young people who either have cancer or are in remission.

CharityNavigator gives the Cancer Survivors' Fund a zero-star rating, though, primarily because the group spends just under 90 cents of every dollar raised on professional fundraising fees. Only 7.4% of money the charity takes in goes to the group's stated mission, according to CharityNavigator's analysis.

The fund, which did not return a call seeking comment, also gets an "F" from CharityWatch and made the Missouri attorney general's 2010 list of "15 Worst Charities."

The Disabled Police Officers Counseling Center
Money going to professional fundraisers: 94.6%

This group claims to offer a crisis hotline and peer counseling to current and retired police officers, especially those who suffered disabling injuries in the of duty.

But CharityNavigator found that just 4.4 cents of the average dollar the Disabled Police Officers Counseling Center raises go toward such programs. Professional fundraising fees eat up nearly 95% of total donations.

The nonprofit has gotten a zero-star rating all six times CharityNavigator analyzed it since 2007. CharityWatch likewise gives the group an "F," while South Carolina's secretary of state included the nonprofit on last year's list of "Scrooge" charities.

The center could not be reached for comment, as calls to the group's business line rang to a voicemail mailbox that was full. A message sent to an email address associated with the charity went unanswered, while a "24-Hour National Crisis Hotline" advertised on the group's website has been disconnected.

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