Exploring the popular narrative that blindly giving money to nonprofit organizations is “better” than giving to human beings.
Today’s “Homeless Initiatives Newsletter” from the City of San Rafael, CA features Lynn Murphy, the SRPD’s Mental Health Outreach Liaison. I think Lynn is great, and my professional interactions with her during my own homeless outreach work were very positive.
In the article Lynn says, “…when you see someone panhandling, rather than give money to that person, consider donating to an organization which helps homeless people with services. Sometimes panhandlers don’t use money wisely.”
I would add: Sometimes nonprofits don’t use money wisely either.
In my opinion, panhandlers and nonprofits are equal in this regard: If you give only money, without committed attention and compassionate accountability, then there’s a real possibility your donation is doing more harm than good.
I. What is a nonprofit, really?
First, consider the term “nonprofit.” This is a misleading word. Nonprofits can generate (and spend) as much money as they like, provided official profits aren’t directly distributed to shareholders or owners.
Many nonprofits are very much for-profit. That’s not always a bad thing, but it’s an important distinction. At the core, “nonprofit” signifies a tax code designation that comes with massive benefits for the organization’s owners and funders. It’s not a seal certifying moral goodness or financial sacrifice.
The conditions for meeting this tax designation don’t stop dishonest people and corporations from using nonprofits to accumulate or funnel personal and institutional wealth, or to do things that are selfish or harmful to others.
Even well-intentioned nonprofits can develop professional “bad habits” like using inaccurate statistics, exaggerating their activities or effectiveness, and misrepresenting information on websites or tax returns in order to get money.
A nonprofit has no more inherent ethical specialness than any other kind of corporate entity. As such, we should exercise the same healthy skepticism we would apply to a for-profit corporation before giving our money to fund its activities.
II.
As a nonprofit employee, volunteer, and client, and my brief time as a county board member, I’ve had first-hand experience with the “dark side” of nonprofit operations at the local level.
Two anecdotes illustrate some of my experiences:
1. A large organization gives false information to the County for public funding
I was once a recipient of services from a publicly funded mental health organization. When I no longer required services, I became a volunteer. A couple of years later, as a county board member, I got to look at that same organization’s service reports during the renewal process for its multi-million-dollar grant funding.
This was a unique opportunity. I had experienced the organization’s services as a client and volunteer, and could now compare the information they were giving the County against what had actually happened during those years.
When I looked at the service reports, I found they did not match reality. The amount of services, number of active clients, and clients’ rate of participation in those services were greatly exaggerated.
More importantly, the way the reports measured client “success” was intentionally misleading. If someone had housing for one day, they were “successfully housed.” If they got a job for one day, they were “successfully employed.” It didn’t matter that most had lost their housing and jobs soon after. It didn’t matter that I saw them homeless on the streets. It didn’t matter that very few of my fellow clients’ mental health had meaningfully improved. We were all counted as “successes” so the organization could keep its funding.
Then there was the ugly stuff. The stuff you won’t see in reports.
If you read those reports, you wouldn’t learn that people were extorted and sexually assaulted in the housing units without repercussion, and clients didn’t feel safe. You wouldn’t see that medications were stolen, and drug deals went down in the living room. You wouldn’t hear about how the night staff were homophobic and transphobic. You wouldn’t learn how a small group of manipulative clients gamed the system to get free housing, food, and easy victims. If you read the reports, you’d only be shown an amazing housing program.
In truth this wasn’t a horrible program. They were trying to help people, and I was able to succeed there. But many people weren’t. The organization lied in its reports to make a relatively ineffective program seem very successful.
2. A local nonprofit falsifies services and expenses while bankrolling the founder-director’s lifestyle
I once served as assistant to the executive director of a local nonprofit. This person repeatedly boasted that they didn’t pay “a single dollar” of income tax– despite hauling in a large off-the-books salary and having many personal expenses paid by the organization (groceries, gas, home utility bills, property taxes, etc.).
So whose money was subsidizing this person’s free and untaxed lifestyle? Donors (and the county government). And whose labor was generating that income? A revolving door of unpaid volunteers and vulnerable young people living in poverty, sold a dream of “contributing to something important.”
What about the organization’s workers– those vulnerable young people, some with no roof to sleep under, struggling to survive on tiny unstable incomes? They paid full income tax… plus self-employment tax, because the organization dishonestly classified its employees as “contractors.”
Over a year-and-a-half period, employees and volunteers began to notice that the organization spent almost nothing on any of its official activities. There was no office– just a PO box. The venues, food, and staff for all events and fundraisers were donated off the books. Marketing was almost all donated.
It also became clear that the organization wasn’t really providing any meaningful ongoing services to its clients. It was just a series of one-off publicity events and “programs” designed to raise money and convince the community that we were helping people… without the actual helping people part.
So I decided to investigate the organization’s marketing claims– the same claims that had convinced me to join in the first place. What I discovered was shocking.
Every statistic was false, and most of the services had never even existed.
In one case, a “24/7 professionally-staffed emergency residential facility” advertised on the website turned out to be the executive director’s own house. They privately admitted it was not used to house any clients, and could not legally be used for that purpose.
In another case, I found the organization had been soliciting donations by falsely advertising a nonexistent “host families program.” The “program” consisted of a single family that had given a close friend a place to stay. They said they were unaware that the organization was claiming credit for their independent act of kindness. They told me they had approached the organization for help after their friend began staying with them… help that was never provided.
And still it got worse. Several staff and volunteers approached me with strong concerns: they saw many clients being harmed by an organizational strategy of false promises and victim-blaming, and left in worse shape than when they arrived.
Everything came to a head when I and two other employees were tasked with conducting field outreach to local homeless people. While we were superficially “helping people,” the main part of our task was to collect data and information we could use to raise money. We performed our task with great diligence, and we learned a lot about life and homelessness while making amazing human connections.
Then the program was abruptly “put on hold,” and the other outreach people were fired. An article written by the director was published in the local newspaper, under my name, listing false statistics– not the data I had provided. The same false outreach statistics were published on the website, used in a fundraising campaign, and included in a County grant application. On top of that, every single person we had talked to on the street was counted as a “client in our program.” I was told I would be fired if I didn’t comply.
My employment didn’t last long after that.
Upon review of public tax returns, I found that the organization claims to have zero employees and spend zero dollars on salaries or wages. Even the director, to whom a large portion of donations and revenues are funneled as personal income, is not listed.
Despite the organization’s near-zero cost of operation, the tax returns claim hundreds of thousands of dollars of “expenses” each year.
The tax returns also claim the organization is providing emergency and long-term housing to its clients… services that don’t exist. Every year, the number of housed clients claimed in the tax return is exactly the same. It’s literally copy-pasted.
This fraud is unsophisticated and paper-thin, yet it thrives with ease.
The organization was reported to the IRS by its own volunteers, during a mass exodus in which the majority of staff and volunteers quit in protest of fraud and client abuse. Evidence was also presented to the organization’s board of directors.
In return, the IRS and board did absolutely nothing.
Within months the organization bounced back with a new crop of idealistic volunteers and desperate clients, and continues growing in revenue to this day.
After the controversy, the organization began displaying a GuideStar “Gold Seal of Financial Transparency” on its website– proof that even the most blatantly fraudulent organizations can get a seal of approval.
III.
I also have another kind of lived experience. I’ve been uplifted, and I’ve uplifted others, through direct individual giving.
Giving your time, energy, and money directly to individuals is not always “bad.” Without the people that gave to me when I was struggling, I wouldn’t be here today. Neither would my wife. The three children for whom we later sacrificed everything to rescue them from an abusive household wouldn’t be here either. Giving to the right person at the right time can change many lives in a big way.
You don’t have to be “rich” to help in this way; though money is important, it is not the most important. Many who helped me were struggling themselves. Likewise, I had hardly a dollar to my name when I began fighting to protect the children for whom I am now legal guardian.
IV.
I think one reason we consider giving to homeless or mentally ill people to be a gamble (aside from ingrained social prejudice) is that– let’s be honest– we almost never do personal research to learn more about the homeless or mentally ill people in our communities, so we know little to nothing about who we’re giving to.
Nonprofits are subject to the same issue. Many people give money without knowing much about what each organization is really doing with that money.
Unfortunately, it can be difficult to obtain accurate information. But would a corporate investor give valuable funding and publicity to a company whose operations they know nothing about?
No. They would do their research.
So what does it mean to “do your research?” First of all, it doesn’t mean looking at statistics, awards, or marketing websites. Panhandlers don’t have those, and nonprofits often fudge their numbers when trying to get donations. We’ve got to find ways to see past the sales pitches and fancy brunches.
For nonprofits:
Ask questions, and be mindful. During official interactions– dinners, interviews, tours, board meetings– they are selling you a story to get your donation, just like a panhandler. The stories might be true, or they might be false.
If you can, find out about financial history. Don’t be shy; hold the organization accountable for financial responsibility practices. Any organization that needs to keep financial information secret from donors and investors is not worth the risk.
Look for dirt. Search for evidence of complaints, criticisms, or negative experiences, and try to assess their potential validity. Don’t dismiss complaints too quickly because you’ve been accustomed to trusting organizational entities, or because a silver tongue coaxed your unearned faith.
Get real experience. Spend time volunteering or observing on the ground level, away from executives and marketers. Publicity events don’t count. You need to observe the actual provision of services in action and think critically about whether it’s effective.
Above all else, prioritize the well-being and elevation of the organization’s employees and the recipients of its services. Try to avoid being seduced by claims of a “greater good.” All that matters is– are the employees and clients truly being elevated? Follow this one ethic fanatically, even to a fault, and I believe your investments of time and money will be far more likely to do good work.
For panhandlers, mentally ill relatives and coworkers, etc.:
Listen. Listen. Listen. Get to know them. Move past their sales pitch or persona (if they have one). Treat them like any other human being. If possible, spend time with them on their daily path. Sit with them in the park. Try to see how and why they do what they do. And don’t forget to observe yourself, too. Try not to make too many assumptions.
V.
The reality is, we aren’t always going to do the research we know we ought to. Sometimes it’s not possible. Sometimes our own life is too busy and stressful, or there’s no time. Other times we may be scared, or we don’t really care enough to bother.
(The dishonest also frequently use tactics to deprive us of our ability to do the research, such as pressurized requests that demand an immediate, uninformed decision. If something feels wrong, don’t be afraid to say No.)
If we don’t have the time or will to find out what’s really going on, perhaps we’re better off spending our time and money on things we do know instead.
VI.
All that said– if you are going to give money to something, and you’re not going to do appropriate due diligence, I think you’re better off giving to a homeless individual than to an organization. You might be enabling someone to fall further in a spiral of addiction (they still would’ve done that anyways), or helping one or two people soothe in their shitty lives… Or you might help someone eat; or your gesture might feed someone’s will to keep living.
Regardless, you won’t cause inordinate systemic harm giving to an individual. But when you give large amounts of money to bad nonprofits you are causing damage to hundreds or thousands of people, and giving greedy executives more money to do more greedy bad things with. You are also reinforcing broken social structures that leech vitality from your community and exacerbate the problems facing homeless and mentally ill populations in general.
You can also give individuals actual things like food, clothing, and personal gear (backpacks, etc.). Yes, these will sometimes get traded for drugs. That happens to the stuff nonprofits give out, too. There’s only so much you can control if you’re not going to engage in proper research or give the actual time and care people need to make meaningful improvements.
If you give nothing else, you can practice giving gifts of humanity. Some of the simplest of these are: eye contact, no avoidance, acknowledging a person’s presence, speaking to them in a normal way, not lying to them, and (when appropriate) smiling. Most of us have been trained to avoid and even fear homeless people and others. We may also feel guilt, and pressure that we have to give money if we acknowledge a panhandler. If we make eye contact, we feel shame and anxiety. But it’s important to do so. It takes effort and practice to overcome our training. Until you’ve been there, you have no idea how much a little humanity can mean.
VII.
When it comes to homelessness, mental illness, nonprofits, and many other things, money often substitutes for time and caring attention. Giving money without giving enough time and attention is part of the problem. It doesn’t matter if you’re giving $10 to a homeless person or $10,000,000 to a presidential candidate– money alone, without focused attention and compassionate accountability, cannot create long-term solutions for most real human problems.
So please– do your research. Give your attention at least as much as you give your money.