Less than 40% of the more than $1 billion that people donated to veterans’ charities in the 2019 fiscal year went to organizations that passed a new grading system.
The Robert Alexander Mercer Veterans Foundation is launching a new initiative called “Charities For Vets” at the end of the month in an attempt to improve that number. The organization’s goal is to inform donors which veterans’ organizations are worth donating to based on what percentage of their funds raised actually go to helping the people they are meant to assist. The plan is to come out with consumer reports for veterans’ charities that will be free of charge for users.
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“The problem is clear, and our goal is to provide facts and figures to divert donations from poorly rated organizations and encourage effective management,” Peter T. Metzger, chairman of the initiative’s advisory board, said in a statement. “Transparency is the best disinfectant, and by shining a bright light on the financial paper trail of these organizations, we can root out waste and abuse while better supporting the men and women who served our country so honorably.”
The initiative will provide charities with one of three designations — “highly recommended,” “honorable,” and “not recommended” — and there are four factors that will determine groups’ scores. Those metrics are whether their overhead cost is lower than 25% of the total budget — if it’s under 15%, they’d be eligible for the “highly recommended” label — and fewer than 5% of joint accounting costs, as well as fundraising costs. Finally, asset reserves must be fewer than three years’ budget.
“There’s a lot of mismanagement, just as their businesses and institutions — whether it’s government, academia, the military, for that matter, corporations, labor unions — there’s a lot of individual organizations inside those sectors that don’t deliver because of mismanagement,” Rick Berman, the executive director, told the Washington Examiner. “And I think there’s a lot of mismanagement in this space as well, as probably in all the other charitable sectors.”
“We’re trying to ensure that when people see something and get passionate or emotional about it, they have a clear-eyed vision of where their money should go to really help,” he added. “That’s ultimately the goal of the whole project.”
In 2019, $353 million was donated to veterans’ charities that were given a “highly recommended” grade, and that accounted for roughly 38% of the total donations. Another $966 million was provided to groups that received a “not recommended” grade, accounting for the other 62%. In total, the group rated 78 charities and didn’t recommend 48 of them.
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This is not the only consumer report on charities available, but past efforts haven’t solved the problem. “Even with those other rating systems out there — and they’ve been out there for quite some time — there’s close to a billion dollars going to poorly rated charities,” Berman explained. “And that’s all you really need to know.”
He credited Rebekah Mercer, a wealthy Republican donor, for coming up with this plan, explaining that “she told me about her concern about so many charities not being legit and people contributing money more or less under false pretenses.”
