Five years ago Marina Glogovac’s son Luka was a member of the Toronto Lynx Juniors, a team in the professional United Soccer League, which acts as a feeder to the top pro league in North America. But at the age of 17 he started to suffer extreme thirst, extreme weight loss and other symptoms. A visit to the doctor threw his future in sports into question: Luka had type-1 diabetes. “He was crushed,” says Glogovac. Luka thought his diagnosis would prevent him from being able to play sports at a high level again. If he could, would he excel or even be allowed to push himself?
In Canada there are at least 20 charities that focus on diabetes, but none seemed particularly well suited to help Glogovac’s son get back into sports until they found one run by a former Olympian who also helps people cope with the disease. “It was life saving for us,” she says. Luka just graduated from Ryerson University where he was an Ontario all-star on the Ryerson Rams soccer team. It was life changing for Marina, as well. Shortly after Luka’s diagnosis, Glogovac went from consulting with venture capitalists and start-ups to head up CanadaHelps, a not-for-profit social enterprise that facilitates donations for any Canadian charity.
In Canada there are more than 86,000 charitable organizations. Many are like the one Glogovac’s son turned to—small, niche operations run by passionate people doing admirable work on a shoestring budget. But when it comes to donating to a cause, most Canadians focus on the largest and most recognizable charities. For the past seven years raising the profile for successful charities across the board has been the inspiration for our annual ranking of the largest charities in the country—the MoneySense Charity 100.
There are so many great and inspiring organizations worthy of attention, so this year we’re expanding our ranking to include all organizations that raise a minimum of $1 million a year to our report. Even at this modest sum only a little over 400 organizations meet the threshold. In fact, four out of every five charities in Canada collect less than $500,000 in revenue each year and 86% of those organizations have less than five staff. (We graded the largest 100 organizations, but you can find a full searchable list that includes approximately 300 additional charities online.)
A closer look at some of the smaller organizations offered up some insight into how efficiently run they are versus the larger charities. Our survey found that in aggregate, smaller organizations scored more As for charity efficiency (a measure of how much goes directly to the cause) than their larger counterparts.
That fate doesn’t surprise Glogovac. “Small organizations are living in this endless fear that their admin ratios will rise and they will not get any money,” she says. That’s not always the case at the larger charities, which Glogovac says can struggle to remain effective as they get bigger in size. But she doesn’t mean to be overly critically of larger charities. She points out that these charities are tackling larger problems and need their infrastructure—but there is room for improvement. It’s not unlike a big corporation which doesn’t always spend money in the most effective way. Case in point, some of the larger charities have bloated marketing departments, a luxury few large businesses can even afford these days.
When it comes to charities, bigger isn’t always better. “You can have big charities that are great and terrible and you can have small charities that are great and terrible,” says Mark Blumberg, a partner at Blumberg Segal LLP who specializes in non-profit and charity law. Judging charities solely on ratios can create a false perception. Consider the health-care charities, which some refer to as “the Hunger Games of fundraising” because they are fighting for attention in a crowded marketplace. Competition drives up costs. “If you have a disease where a lot of people are afflicted, you are more likely to be successful with fundraising. But if you have a totally incapacitating illness that only affects 100 people a year you are probably going to be far less effective at fundraising,” says Blumberg.
In some ways, there is an argument to support smaller charities that are struggling to get the funds to achieve their mandate. Blumberg presents the following quandary: Should you give to the biggest charities, because they are already well-funded or would you be better off giving to a smaller organization and help them to actually turn from mediocre to great?
Thanks to CanadaHelps, smaller organizations are now able to draw on some of the same fundraising tools that large organizations employ to make it as easy as possible for people to donate to their cause, such as accepting donations of stocks, hosting events and setting up regular payments so you can better manage your giving throughout the year. CanadaHelps is a not-for-profit social enterprise that operates as a sort of one-stop shop for Canadians to discover, donate and fund-raise for any charity in Canada.“We’re like Shopify for small charities,” says Glogovac. This year it will process $140 million in donations.
Before you make your next gift, here are a few key factors for consideration to help you evaluate whether your money will be put to good use.
Most donors would like to think charities are run by volunteers who work in donated spaces. The truth is it costs money to run these organizations. They have to pay for staff, buy equipment and secure office space before they can even try to deliver on their mandate. Some even manage millions of dollars, so paying for top talent to get the most out of your donation dollar is a no-brainer. But those costs still have to be reasonable and the lower these costs are, the better. That’s where charity efficiency comes in. This is a measure of how much of your money actually goes towards supporting the organization’s mission. For organizations that don’t run programs directly, such as hospital foundations, we award top marks to those that pass along 90% or more of donated money to the charity or institution being supported. But one important note: Some charities by their nature are just more expensive to run, so when you are researching a charity it’s important to compare it against an organization with a similar mandate.
It takes money to raise money; that’s the reality for most charities—and it’s seldom cheap. Fundraising can be a big expense. We calculate how much it costs each charity to raise $100. Ideally, we want to see charities spending less than $10 per $100 raised, while fundraising organizations that raise money for hospitals or other charities only get top marks if they spend $5 or less. We include the costs to produce special events and lotteries in this figure.
Governance & Transparency
When you are researching a charity, it helps if the organization is transparent. We start by looking to see whether each charity adheres to standard non-profit governance models and whether it lets donors know exactly how their money is being used. To measure this we send out a detailed questionnaire that asks a number of policy questions, including whether or not they have bylaws or multi-year strategic plans. Failing to set term limits on independent board members, using costly street canvassers and lacking policies that prevent charities from selling your information to other organizations are a few of the most common places where charities lose points on our list.
Cash reserves is the final component of our ranking. No charity wants to be in a position where it has to turn away people in need, but that could happen if donations suddenly dry up or if a crisis emerges that creates a sharp increase in people seeking help. A well-run organization will have a plan in place to ensure it has a reserve fund. But it’s a tricky balance: Save too little and it’ll have to shut the doors too quickly; save too much and the charity is sitting on cash that could be better spent. We give top marks to charities that hold three months’ to three years’ worth of reserves.
How to use the Charity 100
Giving is a personal decision and far be it from us to tell you where to donate your money. Follow causes you are passionate about, but do your due diligence. A low grade alone shouldn’t deter you from donating, but it should help you figure out which questions to ask before you give. Giving is much like investing except that the payoff is measured in social benefit rather than in financial terms. Think of the Charity 100 as an aid to your giving decisions; we do part of the work but you have to decide where your donations are going to have the greatest impact.