How Charities Work

Dobby Sock

So you’re given a dollar. What do you do with it?

If you read our “About” page, you know that we here at Runway Games most definitely are supporters of charitable organizations. Once our game launches and we begin picking up some revenue, we will be donating a portion of our in-app purchases towards several different charitable organizations. Though we are only in the talk phase about which charities we are going to be donating to, we already know you likely won’t see names like “American Breast Cancer Foundation” or “Kids Wish Network” under our selection.

Don’t misunderstand – it’s not because these are inherently bad charities or because we don’t like the causes. A problem with a lot of the biggest charities is that the money that you are donating does not actually go to help the cause they are sponsoring; it goes to staff and solicitors.

Just take a look at the Kids Wish Network – a total of $127.9 million was raised by solicitors for the cause. That’s impressive, right? You would think a lot of that money would be going to help children in need. Think again. Of that money, $109.8 million dollars was paid back to the solicitors and only 2.5% of that money went to direct cash aid (totals taken from 10 years of available federal tax filings).

The American Cancer Society, another big-named charity, is another example. For every dollar donated, 9.8 cents go to administrative costs and 21.8 cents go to marketing (that’s almost a third of your dollar).

Even so, it is true that 100% of donations should not go directly to the cause anyway. In order to market your charity, there will be fundraising and marketing costs and cost for a full-time staff in order to make it effective (and oh, yeah. Those costs add up). Unfortunately, not many big-name charities rank anywhere close to the top for best charities by percent given to the actual cause, if only due to the sheer volume.

But there are charities out there that find a way to make it work, even without huge marketing and administrative expenses. In Pittsburgh, PA, an international charity known as “Brother’s Brother Foundation” makes it work with 99.6% of donations going directly to their program. This charity manages to keep only .2% for administrative expenses. Another larger charity, the Ronald McDonald House charities, uses 88.9% towards their program and only spends 2.9% on administrative costs and 8.0% on fundraising (data based on 2012 Charity Navigator). This shows that with a bit of research, you can ensure your dollar is being spent the best possible way and going to a cause that you actually support.

That being said – what are your favorite charities? Where do you want your dollar to go?

(Citations are in the parenthesis)

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