A favorite saying in business is that you have to spend money to make money. Charitable organizations, on the other hand, have to spend money to give money, and it turns out that some are woefully inefficient at channeling donations to the people they're supposed to help.
The nonprofit Charity Navigator website tracks such expenses via charities’ disclosure statements to the IRS to provide donors with an assessment of how well charities run themselves. Looking only at the supply side for the more than 5,500 charities that it tracks, the organization does not evaluate the impact on the recipients of funds, since that impact is often a subjective appraisal of "effectiveness." The statistics used in this list are from the most recent fiscal year's data on the Charity Navigator Web site at the time of publication.
But it is safe to say that all donors give money not to pay for office supplies and inflated salaries for executives (check out MainStreet's overview of the highest-paid charity CEOs), but rather to the programs that charities undertake to further their goals. It is with this philosophy that we highlight the 20 charities in the U.S. with the highest administrative costs, to show which groups take the most of each donated dollar for themselves, in some cases leaving less than half for the intended recipients of aid. For a look at those whose admin costs are next to nothing, check MainStreet's roundup of the 20 best charities in the U.S.
Whether it be rent on prime office space, generous pay and benefits for the board of directors, or the high fixed costs of running a summer camp, overhead like this reduces the impact of a charity no matter how that money is being spent. Donor beware…
20. Tucson Audubon Society
Administrative expenses: 42.8%
Well-known for its many programs focused on the protection of biodiversity and the environment, the Audubon society, based in Washington, D.C., has chapters across the country, run independently of the main office. Its affiliate in Tucson, Arizona, which fosters interest in and conservation of the bird population of southern Arizona, has seen its administrative costs skyrocket as the recession has eaten into its incoming donations. Partially due to Executive Director Paul Green’s inflated salary of $78,800, which accounts for more than 7% of the group’s expenses, the Tucson Audubon Society spends almost as much for its office as it does on the birds it aims to protect.