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How to Avoid a Greg Mortenson Moment – or How to Choose a Charity Worthy of Your Donation

2011 April 27

Hey! Don’t feel like a dummy if you donated money to the Central Asia Institute after reading Three Cups of Tea! You’re in good company as tens of millions of dollars came in from readers, including $100,000 from Barack Obama who donated part of his Nobel Peace Prize award (Mortenson was a runner-up, so again, good company along with the Nobel Prize Committee).

What happened in the case of Mortenson and the CAI is incredibly unique and not in any way representative of the million+ charities operating in the U.S.

Mortenson was doing a good job building schools and providing an education to children in Afghanistan and Pakistan before Three Cups of Tea was published. However, the confluence of a good story (perhaps buffeted with some tall tales) and even better mission (to bring peace through education) brought Mortenson face-to-face with the Peter Principle, which states: “‘In a hierarchy every employee tends to rise to his level of incompetence,’ meaning that employees tend to be promoted until they reach a position at which they cannot work competently.” (source: Wikipedia)

Nobody anticipated how wildly successful the book would be and how much money would rush in to the CAI as a result. Mortenson lacked both the inclination and the business acumen to grow CAI in pace with its massive rise in revenues. Founder’s Syndrome kicked in, and he balked at growing his staff and board of directors to effectively put the money to use. Founders of organizations often don’t like to give away or even share control of their babies. I am sympathetic! At the same time, as a steward of donors’ trust and contributions, founders-in-chief must gird themselves and their babies with good oversight from a competent board of directors and enough boots on the ground (staff) to make the work happen.

Though we are unlikely to see another Greg Mortenson-type tale again soon, here are some good criteria to help you decide if a charity is likely to use your donation as you intend.

#1. Yes, you can still look at CharityNavigator, Guidestar and the Better Business Bureau’s nonprofit list. These watchdog groups are a very good place to start your due diligence. Here’s a caveat: if a nonprofit is not conducting external audits, skip it unless you feel very confident in other indicators.

#2. How many directors sit on the board? I propose the following as a rule of thumb; however, you’ll find many nonprofit do not meet these numbers. It is hard to recruit board members today! So, again, you’ll have to look at this factor along with the other criteria in this post.

organizations with revenues up to $250K: at least 4

organizations with revenues up to $500K: at least 6

organizations with revenues up to $2 million: at least 8 active board members

organizations with revenues above $2 million: at least 10 very active board members plus additional committee members who do not need to sit on the board.

#3. The Common Sense Factor

This is the gut feeling you get by looking at the charity’s website, annual reports and other informational materials. The Common Sense Factor answers the questions

Does the model seem logical? No, you don’t need to be an expert in the field to judge this.

Are there enough staff members to conduct the work?

How does the organization evaluate its effectiveness? Does it tell you how it does?

Does the info the charity provides on numbers of people served, health clinics built, food distributed, etc. seem feasible? How does the charity count/verify this information?

Here’s what tipped me off about the Central Asia Institute.

When I asked for information about the organization before making a donation, the materials they sent me were OVER THE TOP in their production quality and the sheer quantity of full-color postcards they sent in a glossy two-pocket folder was astounding.

Nonprofits must promote and market! They must produce professional-looking materials that grab attention and inform. They do not need multiple 4×6 frame-worthy heavy stock cards to illustrate their good work.

Right then, I knew CAI was allocating too much funding to promotion, AND it was unclear how much promotion was aimed at encouraging me to donate vs. buy Greg’s book.

Common Sense. It works. Trust yourself. Don’t be bought by a slick message or pretty materials. Don’t donate to a person; donate to the organization if you believe it’s doing its job.

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2 Responses Post a comment
  1. ChattyPat permalink
    May 5, 2011

    Smile Train Is All About Outcomes and that’s why i choose this charity to Donate too! Because you can actually see how much they help children from across the world. Success stories are my favorite!

  2. May 24, 2011

    Hi,
    Thanks for such a nice,useful and informative blog post. It is very useful information and I think the donor agencies should read this one.
    🙂

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