The Difficulties of Evaluating Charities (MSP Blog Post)

  1. Throughout my research, I’ve found that when evaluating an investment in a company, there are three things that should be considered. The first and most important one is the risk, as if there is too much risk, then often it is not worth investing. Even if the reward is huge, making risky maneuvers over and over again increases chances of failure. The second method of evaluation is purely reward focused, and it puts the possible gains over anything. This is perfect for aggressive investors who are heavily risk-tolerant, and it works well for them. The final method, and important for voluntary donations into nonprofits, is the moral one and relies on intuitive judgement. In order to donate, one must agree with the mission and purpose of the nonprofit, which is why it is important to look at mission statements. Previously, I was only focused on risk, and by doing this research, I have been able to focus on purpose and rewards as well. However, despite all this, I see the most value in evaluating based on risk, and risk alone, as it is the most facts-based and objective out of all three.
  2. I found that is important to look at the numbers before investing because many charities portray an illusion that makes them seem larger with more influence than they actually have. For example, the National Arthritis Foundation is known as a prominent research organization in the United States, but they are actually not as significant as it seems, as they are running negatives in many departments. Their high administrative fees make them focused on advertising, which can only be found with thorough tax analysis. The higher and more to the national level organizations are, it seems like there is more spent on administration, which would work well if there was a correlation to the cost to raise one dollar. However, the problem is that a lot of organizations cannot seem to bring the cost down, which is what I learned while evaluating the charities’ taxes.
  3. The main thing I’ve learned about giving away money is that there are millions of dollars given to places that don’t deserve it, depriving many organizations and causes of necessary funds. Scam charities make their living off of gullible people that cannot take the time to diligently research an organization, and this is why they are able to continue. Main Street Philanthropy (MSP) has been a great help because it has allowed me to dig deeper into daunting tax forms and simply evaluate a charity based on objective finances. What used to seem like an impossible task has turned into something fun, and I would do it for more charities in the future. The only problem is that MSP has clouded my belief that all charities are positive and running well, as the sad truth is that there are many charities that simply do not have the funds to survive, and will die in the future. Although I’ve learned about these horrible truths, I am glad to have learned them via in depth tax analysis.
  4. The two organizations I chose to research were the National Psoriasis Foundation and the National Arthritis Foundation. The National Psoriasis Foundation is an organization I am deeply involved with, as I am the Youth Ambassador for San Diego. I chose the organization because I wanted to see how they run on the inside, as I am already aligned with their purpose and goal of assisting those diagnosed with psoriasis and psoriatic arthritis as well as finding a cure for them, since I’m diagnosed with both of those myself. The National Arthritis Foundation’s mission is to find a cure for arthritis and helping those who have it, and I am deeply committed to helping further that cause. I am a huge advocate of health research, and both these organizations are oriented to supporting that mission.
  5. Our group’s final charity was the Scripps Research Institute, and there were a variety of factors that went into choosing this nonprofit research organization. The first one was the mission, as the organization has a proven track record of making major research differences in the world, especially focusing in biomedical engineering, a rising and impactful field. A second reason was the tax form analysis, as the organization had great if not amazing fund allocation services that allowed the institute to efficiently fund its cutting-edge technology. The final reason was the location and proximity, and this was very important, as it allowed us to call to set up a meeting where we could tour the facility. Their flexibility and appreciation in handling this call supported our decision to donate funds to this charity.
  6. I really hope our donation will go to researching more things in biomedical research, and it could cross into the realm of making medical devices or finding new cures for diseases. The Scripps Research Institute is a close-to-home organization that has already made impacts to people around the world, and it would be gratifying to see that our donation would go to furthering those impacts. Funding and money is always at a premium, so it would be very rewarding to see our efforts going to researching and discovering new ways to help people. Health research is a field that directly helps people live their lives, and ideally our donation would help end the sufferings of as many people as possible. I plan to take an active role in health research, and I may branch out and volunteer at the institute to help not only the cause but also people who need more assistance and help.

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