The ALS Ice Bucket Challenge continues apace, along with the raging debate over its methods of awareness raising. Is any stunt reasonable in the name of charity? Would there be a better way to make ALS go viral—so to speak? Is the challenge educating members of the public about the realities of the disease, in addition to generating indisputably vast amounts of funds?
And now, another chapter in the saga has erupted: Someone finally thought to take a look at the group’s annual report, the result of which generated headlines like “73 percent of ALS Foundation [sic] Donations are Not Used for Research.” That sounds horribly inefficient, resulting in a knee-jerk reaction. Who wants to donate to a charity that can’t use its funds effectively?
The reality of the situation is more complicated, and it highlights the need for potential charitable donors to always evaluate charities before giving funds. First, it’s important to understand what a charity’s stated mission is, then it’s necessary to see how it’s allocating funds to reach that goal.
While certified charities are required to disclose their financials in documents available to the public, many potential donors neglect to read the fine print. Instead, they donate to charities that have been made popular through extensive marketing campaigns (like Susan G. Komen’s endless pink ribbon branding) or viral memes (see: KONY 2012)—whether or not those charities actually are the best options. As the ALS Association has achieved a huge profile, donors aren’t taking a close look at its financials, which are handily available on their own website. When they do, they don’t think about the actual goal of the group—which, it may surprise many people to learn, isn’t just curing ALS.
According to the ALS Association, the group “lead[s] the way in global research, [provides] assistance for people with ALS through a nationwide network of chapters, [coordinates] multidisciplinary care through certified clinical care centers, and [fosters] government partnerships…[building] hope and [enhancing] quality of life while aggressively searching for new treatments and a cure.” Thus, the group has what could actually be viewed as a two-armed mission: Research and patient support, not just finding a cure.
In its most recent expense report, the organization reported that it spent just 28 percent on research, 19 percent on direct support, and 32 percent on public and professional organization. That’s 79 percent of funds going directly to the stated mission of the organization, with a relatively small percentage beyond that going to fundraising. Fundraising is a necessary and critical component of charitable work, as long as it's efficient and generates good returns, as the ALS Association’s annual report demonstrates is in fact the case.
Just 7 percent of its funding was eaten up with administrative expenses—more efficient than many charities (which earns it a high-ranking among groups that analyze charity spending), but less than some might ideally hope for. While the ALS Association doesn’t have the extreme executive salaries seen with groups like Goodwill, several executives do make salaries in the upper six figures. Some might argue that this is a cause for concern, such as those pushing for salary caps on employees of charitable organizations. Others might find this perfectly reasonable, given that good executive compensation attracts good personnel.
The Daily Dot spoke with former cancer researcher Danielle Glick, who worked at a largely federally funded lab in Chicago, about her experiences as a researcher and the role of charities in the research community. She noted that while federal grants can be substantial, which is necessary given the high cost of running a lab, they come with a lack of transparency for members of the public—unlike private charities, federal agencies are not required to disclose their financials as closely or in as detailed a way. For example, she pointed out that when a university lab receives a federal grant, a large percentage (sometimes as much as 40 percent) is skimmed directly off the top and sent to the university.
She’d prefer to see more transparency with federal funding, on par with private funding, to help members of the public see how their funds are used. However, she points out, private charities aren’t always open about their policies and processes either. While they’re required to publicly disclose breakdowns of how they use their funds, they don’t have to put forth information about the standards they apply to grant recipients. The American Heart Association, for example, doesn’t grant funds to researchers who work with human embryonic stem cells, for fear of igniting controversy and upsetting conservative donors.
“In a lot of ways,” she says, “I think [charitable funding] is good, because with the government-backed grant funding, there are a lot of layers of the public not knowing what that money is going towards and what is actually being funded. When you are asking for more public funding, you have to be much more upfront about what you are trying to do, and what your goals for your research are.”
I asked her about concerns when it comes to administrative expenses, particularly executive salaries. She pointed out that there’s a continual push-pull with charitable organizations as with all companies: The desire to get the job done efficiently, and the need to have the best people. Sometimes the best person for the job costs more or needs more because of the charity’s location and other factors. Do you offer location assistance and a slightly higher salary to someone who will bring in more funds, supporters, and networks for a charity, with the understanding that it will pay off in the long term? Or do you try to cut costs with a cheap employee?
Given what you know about the ALS Association’s mission and how it uses its funds, is it the right choice for you? That depends on your priorities as a donor when it comes to where you want to see your funds going.
While research, professional care, and patient support are all important causes, you might prefer to focus on one specific angle. And donors might be put off by the knowledge of their specific funds are being used—which is why it’s important to review individual charity financials to determine if you’re comfortable with where your funds are being applied. If you want your money specifically going to ALS research and directing funds towards new treatments, the ALS Association may not be the best way to direct your funds. If you think patient support and provide education are important too, the ALS Association is actually a highly efficient destination for your donations, offering integrated ALS support and research.
When it comes to charity inefficiency, the ALS Association ranks much better than some. But if you think dumping water on your head will somehow magically cure ALS, think again. We’re a long way from that, and that’s not the primary or even the majority-funded purpose of the ALS Association. Donor awareness is key for understanding what charities do and how, so that donors aren’t surprised when scandals break—and can push back when people criticize charities without understanding the full scope of their mission and financials.