Checking on Charities


POSTED: Sunday, May 03, 2009

An envelope arrives in the mail or the phone rings, asking for a donation to help grant a wish for a child with a life-threatening illness.





        » Know your charity before donating.

» Make sure the charity is registered to do business in Hawaii by visiting ag.ehawaii.gov/charity.


» See where your dollars go — to program services or fundraising.


» Don't be misled by a charity's familiar name, since some questionable charities choose names that sound like those of respected organizations.


» Resist pressure tactics and emotional appeals.


» Do not give your credit card number to a telephone solicitor or Internet site you do not know.


» Keep a record of your donations and avoid giving cash.


» Once you are satisfied that a charity is worthy, give generously, if you can.


» Contact the Attorney General's Office at 586-1470 if you are solicited by a charity that is not registered with the state of Hawaii.




Sources: American Institute of Philanthropy, Hawaii Attorney General's Office


Depending on who is asking, the money you give could go to help the child, or it could go mostly to fundraising costs.

Now there is an easy way for Hawaii residents to find out. With a few keystrokes, they can check up on a charity before making a gift, using a searchable online database created by the state attorney general's office.

Under a law that took effect in January, every charity soliciting funds in Hawaii must register with the state, including those based on the mainland. So far, 750 charities have done so and are listed on a database unveiled by the state last week, with revealing details on their operations.

“;If they're not registered, you should think twice about giving to them,”; said Hugh R. Jones, supervising deputy attorney general, who oversees charities and was a driving force in getting the law passed. “;You should contact our office if you've been solicited by an unregistered charity.”;

“;The core purpose of the registration law is to protect good charities from bad ones and to protect donors from fraudulent solicitation activities,”; he said. “;We hope the registration forms and data will educate donors, as well as allow donors to spot questionable practices and report them to our offices.”;

By searching the database, residents can find out whether a charity is registered to do business in Hawaii. They can see who is on its board of directors and whether board members are related to employees.

An easy-to-read financial sketch reveals how much is spent on fundraising, how much on management, and how much goes to programs. It shows if they use professional telemarketers and the basic terms of their contracts. Soon the database will add the charities' federal tax returns.

The Hawaii registry reveals some interesting contrasts. Take, for example, two charities with the same mission and similar names. Both raise money in Hawaii to grant wishes of critically ill children, but their finances are worlds apart.

“;I just hope that people, before they donate to any charity, do some research,”; said Lyn Brown, executive director of Make-A-Wish Hawaii Inc. “;Particularly now that money is tight, people should make sure that their money is doing what they intend it to do.”;

Make-A-Wish Hawaii spends virtually all its funds on making wishes come true for critically ill children, according to its financial statement. Fundraising costs account for just 3 percent of funds raised. Of each dollar spent by the organization, 96 cents goes to program costs.

That's because the charity has lots of partners, such as Macy's, Hyatt Hotels & Resorts and Cold Stone Creamery, which hold their own fundraisers and deliver the money to the organization, Brown said. Her agency does no telemarketing. Last year, the local charity, an affiliate of Make-A-Wish Foundation of America, helped grant wishes to 734 children. As its top-paid employee, Brown earns $43,000 annually.

In contrast, Children's Wish Foundation, based in Atlanta, spends more than half of what it raises on fundraising, or 53 percent, largely because of the cost of telemarketing. For every dollar it spends, 43 cents go to program services, according to its financial statement on the Hawaii Web site.

Linda Dozoretz founded the organization in 1985, several years after her 14-year-old daughter died of bone cancer. She serves as its executive director and secretary-treasurer. Her husband, whom she met through the charity, is its president and they each earn $182,000 a year.

Dozoretz declined to say how many children it served last year, and that information was not included on its tax form. Asked about its relatively high ratio of fundraising costs, Dozoretz said her agency is trying to reduce its reliance on telemarketing in favor of direct mail.

“;An organization should be measured by the work that it accomplishes, not by dollars,”; she said. “;If you were in our office physically, you could see the work that we do.”;

“;A lot of organizations are all about numbers, and we are all about the children,”; she said. “;You can play with figures. We are extremely accurate and very honest in how we report things.”;

Hawaii and Colorado are the only states that require charities to register online, according to Chris Cash, president of the National Association of State Charity Officials. Electronic filing not only makes the information readily accessible to the public, it also helps officials with enforcement, he said.

“;You can do things with a digitized database that you just can't do with lateral files down in the basement,”; said Cash, who oversees charities for the Colorado secretary of state. “;At the click of a button, you can look for any organization that made prohibited loans to officers, or spends zero dollars on program services, or has a very high fundraising expenses-to-contributions ratio.”;

Ten states do not even require charities to register with the state, either electronically or on paper, according to Laurie Styron, an analyst with the Chicago-based American Institute of Philanthropy. She cautioned that donors should remember that being registered does not imply state endorsement, and financial statements should be carefully reviewed.

The new Web site opens up a wealth of information for Hawaii residents, who previously could only check to see whether a charity had a certificate of authority from the state Department of Commerce and Consumer Affairs to do business here. For charity watchdogs, it's a long-awaited reform.

“;This is the culmination of about 10 years of efforts,”; said Jones, whose office tried unsuccessfully twice to get a registration law passed. “;I'm really happy about it. I think it will have a very big impact.”;



The state's new online registry allows donors to check out charities before giving. A side-by-side comparison shows big differences between two charities with similar names doing business in Hawaii.


 Make-A-Wish Hawaii Children's Wish Foundation International
Total contributions$1.51 million$13.29 million
Program service expenses$1.45 million$5.87 million
Fundraising expenses as a percentage of funds raised3%53%
Program services as a percentage of total expenses96%43%
Number of clients served734Not disclosed
Salary of executive director$43,000$188,000


Source: Hawaii's online charity registry. Information on clients and salaries comes from tax returns, which will soon be added to the registry.