Are Charities Ripping Us Off?

Question


Hi Barefoot,

Do you know of any charities which do not have highly paid CEOs and numerous other well-paid staff? l would like to make a donation to charities where all the money goes to the people who need it, rather than paying managers and having only the leftovers go to actual charity. What’s your advice?

Ruby

Scott's Answer


Hi Ruby,

You need to think of it like you’re making an investment, because that’s essentially what it is.

(Instead of generating a positive financial return, you’re hopefully generating a better world.)

And when it comes to investing I’ve never once said: “I only invest in companies where the CEO and the management are paid peanuts!”

Still, while there are 2,500 companies to invest in on the stock market … there are 56,000 registered Aussie charities! So there’s a lot of charity chaff to wade through. Here’s how I went about it when I chose a charity to support:

First, I focused my efforts on one area I was really passionate about, rather than spraying it around. For me, that was supporting people in financial hardship. For you, it will be something else. What matters is that it matters deeply to you.

Second, I researched the programs in that sector that were getting cut-through. Before I made my ‘investment’, I read through their annual reports and interviewed the senior managers: Were they switched on? Did they have a compelling vision? Did I honestly believe they had the chops to achieve their vision?

Finally, after making my ‘investment’, I have continued actively monitoring their progress, just like I do with my portfolio of shares. And I can tell you that the kick I get from supporting great people doing amazing things has been just as rewarding as my portfolio.

Scott