"only 8 cents of every dollar shows up as direct aid and grants"
That's an extremely misleading statement. For instance, a food bank giving away food to a pantry does not count as "direct aid and grants" (at least, if they're defining that as "Grants and other assistance to domestic individuals." from the I-990" ). The salary for the warehouse worker operating the food bank is also not counted in that 92%.
Other cherry-picked statements like "32% of donors trust charities less today than they did five years ago" (not giving the percentage that trust charities more, or any other way to contextualize) make it clear that this is just a hit piece.
I don’t even get the point of this site. They say:
> Most of this spending isn’t waste. Hospitals need staff. Universities need facilities. Even small charities need people to run programs. The problem isn’t intent. It’s that the reporting system was designed to satisfy the IRS, not to show donors where their money went.
The complaint seems to be that the form filed with the IRS has the information the IRS is interested in, not the information whoever made the site wants.
The reality is that I know how the places I donate my money and time to use their money because I’m not relying on their IRS filings to get that information. I would suggest others do the same and donate to places where they understand what the org is doing and where the money is going.
Having a detailed and auditable report of how money is being used is really helpful for creating the understanding you are talking about. That is what accounting is for and why it is so essential to modern life.
The site is obviously just an advertisement for a weird camera surveillance system, but the concern about incomplete accounting is very real. In many places one might want to contribute to non-profit efforts, IRS information isn't even available. In my work in Ecuador, I have seen a lot of fraud, and half-baked charities. Some rich NGOs sometimes walk in on some field trip that donors have paid for, make some statements about all they are going to do and disappear without follow-up. Basically they are just tourists on a free vacation taking publicity photos. There is a specific organization that comes down to build environmentally safe toilets. Not only are these built by young middle class volunteers that know nothing about building anything but their CVs, the communities they are helping don't even need new toilets. The building supplies tend to be repurposed after the volunteers are gone, every single year. I'd like to know if I paid for that. There are seeds of merit in the program, but also unnecessary waste.
Despite negative examples, there are many worthy things that are done, and could be done in the region. Northern money can go very far in the areas I work. It can do a lot to not just improve but transform people's lives. So you suggest that an answer to money misuse is to have personal experience with any organization you donate to. How many people who have the money are going to spend any real time in Amazonian Ecuador? They aren't there now. What is going to change? Since there are few people with money who can be personally involved, does that mean that no effort should be made to better people's lives there? Obviously, that is what accounting is for. I think the article is absolutely right about that. I find their solution to be creepy and invasive. Maybe just having better auditing and reporting standards makes more sense than pointing cameras at hospital patients, but what do I know?
That’s not a misleading statement for what they’re trying to say.
They wouldn’t disagree with what you say. The point they’re making is we don’t know. Maybe 92% of the remaining money is being spent usefully towards programs and 0% as overhead. Or maybe 0% usefully and 92% as overhead.
The IRS disclosure requirements are not sufficient to know. And yet we will give those donating to both organizations the same tax breaks.
The argument is to increase disclosure requirements for organizations through which so much money is passing so that we have a better idea as to how nether those tax breaks we’re giving are actually giving us any value in return.
In a similar vein if anyone thinks this is an incorrect viewpoint (it’s not):
For every combat soldier in the Pacific Theater in WWII there were roughly 4.3 support soldiers. I don’t think anyone questions the fact you needed all those people for support and not direct action.
The problem is there is no guarantee the warehouse worker at a food bank is doing anything of value. So we can’t assume such things are productive without direct evidence.
I think the material point of HN User Yuliyp's comment is that the organization claiming to be providing us with "Charity Sense", for some reason is not providing us all of the data we need to make sense of charities. Even worse, it seems to be deliberately disingenuous in presenting the data it does give us.
At least provide explanations of why certain things are included or excluded from the numbers they're presenting. Why are hospitals and universities lumped in with the food bank in the first place for instance? When you remove them, the numbers and percentages radically change. Not only that, it doesn't feel like the average person sees a food bank and a university, or a hospital, (and certainly not a university hospital), as the same sort of "charity". When you start digging deeper into the numbers, it just looks like they were lumped in to make the less resourced charities like food banks look bad.
Maybe there was some other reason they had for using this amalgamation? But they should be forthcoming with what that reason was.
> Why are hospitals and universities lumped in with the food bank in the first place for instance?
Ask the IRS / congress, this isn’t some arbitrary grouping it’s what charity means in the US.
I do think it’s worth asking that question, but ask it of the people who can do something about it.
The people claiming to be making sense of charities are the people who are supposed to be teasing that data out.
> Why are hospitals and universities lumped in with the food bank in the first place for instance?
Because if you don't have shareholders and like to raise money that's not from VCs, it is convenient to have the donors get a tax deduction.
Otherwise you can run a business with little to no tax without being a non-profit.
The question was not why did the IRS amalgamate those organizations.
The question was why did Charity Sense amalgamate those organizations.
What value is it adding if it does nothing other than report data we could get from the IRS in any case? Saying, "Hey man, we just re-post the data we get from the IRS." Is the same thing as saying, "We didn't really do any analysis."
Because they’re pushing an agenda that they mean to profit from.
"It’s just that almost nobody looks."
Looking will blow up too many cushy deals for too much of the Powers That Be. A great deal of it is non-show "chairmanship" jobs for the family and friends of politicians. Legal bribes.
Feeding Our Future was another fine example of the shenanigans that go on in the US. Power Forward Communities was setup with $100 and captured $2 billion in EPA grants; caught while still doing only token work and not yet having been drained into the pockets of the favored. Abundant Blessings in CA was another nest of fraud; in criminal court right now.
Seems like you can't go more than a couple days without another non-profit scam mess hitting headlines.
Can you explain what you're referring to about Power Forward Communities? As far as I can tell it's a network of established non profits like Habitat for Humanity and Rewiring America, it seems they did more than token work in things like electrification before their grant was rescinded.
The actual org itself acts as an umbrella to coordinate work among the participating non-profits.
OK - except I recall a tour of Japanese graduate students at CompuMentor in San Francisco, studying the whole setup.. the reason? there are no "non-profits" in Japan (at that time, still?). CompuMentor was a great example -- both dipping deeply into the tills with special sales and large steady cash flows AND serving a genuinely underserved niche.
Throw-down on some EPA effort As If That Is Typical, is intellectually dishonest. Mitigation and remediation are expensive and take time. And also there is substantial abuse and greenwashing. So you throw out the baby with the bathwater, so to speak.
"Its all a scam" says the barstool attorney, doing nothing.
So many people sitting on the wealth created by the hard working people, lol.
Strangely, what they're selling is some kind of automated surveillance camera system.[1] "Whatever you funded, we can monitor it."
Reminds me of this recent DefCon talk about sketchy IoT surveillance devices: https://www.youtube.com/watch?v=WCnojaEpF2I
I think every organization (hi, Flock) selling something like this should be required to install it on their own premises first.
For anyone even more skeptical of where your money goes when you donate to a nonprofit, there are plenty of resources out there for researching this. CharityNavigator is a popular one, but I donate primarily to GiveWell: https://www.givewell.org
I use watsi.org since its been reliably vouched for on HN for a long time now
But which is more trustworthy? We need a charity watcher-watcher to tell us.
The organization I work for does something similar and positively evaluated GiveWell in November 2025 (see https://docs.google.com/document/d/1U9H34ui_hvnPOwvsvcZF3VCC... )
Personally, the more I look into GiveWell the more I think it's an amazing way to donate
>Recursing
apt username
This is getting downvoted, but it's a salient point nowadays.
Who watches the watchers?
Because if it's no one, then all we're doing is vouching for what could easily be scams set up by who knows who to steer our money to dubious organizations for who knows what purpose.
We shouldn't trust the watchers any more than we should trust, say, Feed the Children. Or Medecins Sans Frontiers. All these organizations should be watched in a comprehensive fashion.
you beat me to it (_/\_)
I worked with a large number of these so called "legitimate" charities and after what I saw I will never give a penny to any non-profit. You will have far, far more impact figuring out something you care about and directly spending $100 to accomplish that than giving $5000 to any of these organizations.
In what respect did you work with them? What is your main complaint? As far as I know, top GiveWell charities give malaria nets and stuff and it saves lives at fairly efficient rates.
Malaria nets are band-aids, what really needs to happen is building up institutions and infrastructure that make the nets unnecessary.
Its easier to build institutions without malaria making you sick all the time.
Burkina Faso was one of Bill Gates biggest donation spots and it's had an endless series of unstable leaderships, insurgencies and coups in the last decade. This scares away both foreign investment and foreign aid. Countries like that have made lots of economic progress but seem to be stuck in this endless cycle of instability which is the bigger issue if the solution is to develop proper industry and proper modern housing sealed from insects.
Just because Bill Gates didn't solve all issues in Burkina Faso doesn't mean the donations were meaningless. Burkina Faso's GDP per capita has quadrupled since Bill Gates started donating, in addition to a lot of lifestyle indicators like child health and child mortality and so on.
There's a mistake I see in the comments here that "non-profit" = "charity". There are a large collection of non/not for-profits that are not even remotely in the charity business. Some of these companies have long legacies that stretch back to academic labs spun out of major U.S. educational institutions.
I've worked for two such companies in my career (and partnered with a few others) and both of them were really just normal businesses that used their non-profit status as part of their business model. They used that status to position themselves as an objective second party to various governments and businesses and signal trust. They also internally represent themselves as something different from commercial businesses, just with a weird way of mopping up profit at the end of the fiscal year. At one I was a researcher and the other a low-level executive.
At the working level, both paid slightly under comparable jobs in the private sector, were often very top heavy, and spent lavishly on facilities and had large internal R&D programs that often went nowhere but acted like overamped hands-on training programs that expressed themselves in additional expertise they could offer their clients without having to turnover staff.
I often had multiple personal offices, subsidized mid-level restaurant quality lunches, laboratories, assistants, and research budgets stretching into the low millions of dollars. This was in addition to the regular work we were contracted out to do, which was often either direct work on fairly cutting-edge S&T like programs or providing special advisory and expertise services to those same customers.
All of the companies I know in this space are also fairly top-heavy with, executive and administrative pay helps sop up any profit.
The law requires these companies to report quite a bit of information about their financials into the public space every year [1]. Some of the executives make quite extraordinary pay.
Here's a list of the various types: https://www.irs.gov/charities-non-profits/exempt-organizatio...
(which can include golf courses, heh)
Very misleading analysis, the 8% direct grant comes from adding universities, hospitals and non-charities that make up 85% of the denominator. If you account for this using their own numbers, you get about 50% overhead, not 92%
Well, ok.
But this just goes to show that we need watching and monitoring infrastructure even for the organizations who claim to be watching and monitoring on our behalf. We have to know who's full of it, and who is acting in a more trustworthy fashion.
What you point out is a huge miss. There is little chance that it wasn't intentional. There should, at minimum, be an explanation presented as to why they did that?
yes, what we need is for charities to operate on a quarterly reporting cycle, so that their administrative overhead increase, and (like public companies) they can be myopically focused on short-term performance.
I noticed you use the word charity - which invokes an image of giving those in need food, money, or care.
The vast majority of non-profits are political and social lobbying efforts. And I don’t think it’s unreasonable to ask them to fill out a form.
It's truly ridiculous how detached whoever created this LLM-generated website is from the inner workings on non-profits. It's never the case that someone gives a large sum of money to do whatever the fuck you want to do with that money.
They're usually given for a fixed period of time to do something grandiose by the end of it and the NGO has to report how they've spent every cent of it, usually at the end of that grant, but sometimes along the way as well (every X months). Not to the IRS, but to grant-givers.
It looks like a lot of the monies in that chart are for wages and admin. That's not the worst thing. Many charities spend their money on doing things for the betterment of society and those people need to be paid a salary for their work. If there's a charity that cleans up parks, I would assume their wage expenses would be high to pay for the people doing the cleanup work.
Not saying that there's not grift in the nonprofit world, but my experience with a lot of people who work in this space is that they're good stewards of the funds and very dedicated to trying to help the world be a better place.
Indeed, what higher purpose is there except to pay oneself. At sufficiently low levels of productivity, one can consume arbitrary amounts of charitable donations. In fact, the ideal charity is a large vote bloc that is paid to clean parks. A tough job, a hard job, and one that requires back breaking labor of 4 sq. ft. a day.
Would be interesting to see some kind of grift estimate as a heat map where the X axis = revenue and the Y axis = age.
I think charity is good, I donate to charity. At the same time I once watched a podcast that basically said when you donate to charity the mindset and often the outcome of charity is that its money you throwing away and did not invest in making longer term differences. Its an utterly rude statement but I still feel a fundmental tension in that premise that an organization that could seek profit but whose fiduciary responsiblity was to the community it was serving rather some stock owner would have incentives to establish better long term charity. That well example is supportitive of that thought.
But I think the the argument is certainly not good at other times because not everyone has the ability to invest and make a difference donations lower the requirements and the barriers to both. Also whose to say even a throw away Well doesn't make the world of difference to people who really needed even if it was temporary. I just a struggling thought I have sometimes...
I’ve given to non profits where I know the people personally and how they operate; and to FreeBSD and NetBSD, which deliver pretty great results on a relative shoestring budget.
One of the reasons why I donate to smaller local charities, like the Husky Rescue near me. Or charities that accept physical goods like Toys for Tots and food banks.
Isn't charity just a business model these days? The first time I came across was about 10 or so years ago where, I think it was a 60 minutes did a report on Movember, how they have some scheme/scam where the guys who started/own the "charity" also have another company that owns the Movember brand and the charity then has to licence the brand from that company. Meaning that for every dollar donated a good portion (can't remember the exact figure) then goes straight into their pockets as license fees.
This was the trick with the Aboriginal Flag in Australia but that guy beat the odds by getting it into government. I have some suspicion that the various derivative rainbow flags are a similar structure.
Aka the Nonprofit Industrial Complex.
Here's a surprisingly factual Teen Vogue primer:
https://www.teenvogue.com/story/non-profit-industrial-comple...
Wow. This is a massive figure.
The US GDP is $30 trillion but most of that is spoken for; it's wages, costs, reinvestment — money that's already doing a defined job. But this $3 trillion is different; it's flowing through entities that are completely exempt from normal market pressures and competition.
What's insane to think about is the composition of it; this isn't charity money, it's Medicare reimbursements, government contracts, university tuition, hospital fees. Which means the most important sectors of the economy — healthcare, education, research — are basically being run by nonprofits. Enormous institutional players with massive lobbying power, operating in markets with no real competition.
It's less that profits are being funneled into nonprofits and more that entire industries have reorganized themselves around the nonprofit structure to avoid the accountability that competition normally creates. Which explains a lot about why the economy feels so captured and doesn't make sense anymore.
> Much of it is operational necessity. But from a donor’s perspective, only 8 cents of every dollar shows up as direct aid and grants. The rest is invisible
One of my groups of friend groups has a lot of people who work at non-profits that are really dedicated to good causes. They are people who care and wanted to find jobs with purpose. The companies they work for aren’t, as far as I can tell, trying to grift or swindle.
Yet their overall efficiency looks a lot like this chart: Very little money makes it out of the program because it’s so expensive to pay for all of their staff, office space, and meta-activities like doing more fundraising.
From the outside looking in, there is a lot of malaise and inefficiency that just gets accepted at this level. They know they’re taking a pay cut relative to private industry so they, in turn, put in less effort. Many of them invite us to meet up in the afternoons because they’re “working from home” or just leaving the office early. Every time they encounter hard work the solution is to hire more people. Some of them switch to for-profit companies for a while before coming back to non-profits for the laid back working environment. It’s just accepted, to them, that non-profit means it doesn’t have to be efficient or a lot of work.
Maybe my second hand experience is unique to this little bubble I’m in, but whenever I see statistics like this I think it’s more normal than not.
There's also the assumption that "direct aid and grants" is somehow good - but that can also be exactly where the fraud is.
Perfectly understandable, I think. Gotta look out for number one, no sense burning out if you're not being paid enough to cover recovery.
> no sense burning out
Maybe I wasn’t clear, but even if they did put in 8 hour days they wouldn’t be close to the level of stress that we associate with burnout. This isn’t a self-protection measure so much as a lifestyle choice.
AI;DR
ai;dr
I wonder how much of this is religions
these are the lobbies in the middle east, lobbying to topple regimes and co.
I believe that many (most?) non-profits are a combination of grift and money laundering.
I would love to see requirements that 75%+ of all non-profit revenue has to pass through to the community, that non-profits may not transfer funds to other non-profits, and that directors and officers cannot be compensated and have very modest limits on expenses.
It seems to me that there's a strong Pareto law inclination to this. 99% of non-profits are going to the local volley ball club type organizations that indeed don't make any money at all, or maybe a few hundred at most. I am in the board of a local chess club and you should see the amount of discussion that sometimes happens around a budget of no more than the equivalent of several hundred USD. I honestly can't imagine anyone is using us to launder money. (How, even? Yearly contribution is less than 100 EUR and even major sponsors for tournaments etc are easily traceable local companies that contribute <1k EUR each)
Then there's a relatively tiny amount of organizations that processes the vast majority of funds. Universities, hospitals, big FOSS organizations, etc. Those are the ones that are actually interesting.
For a huge chunk of non-profits, the non-profit work is the labor of their members. Their goal is not and has never been to pass revenue through to the community - what would that even look like for a hospital? There's a million different examples here.
Directors of non-profits that have enough money for this to matter are doing this as a full time job - are we going to eliminate every competent director from working here if they can't afford to stop getting compensated for their work?
Your suggestion would cripple non-profits doing all sorts of important and beneficial work.
My non profit is genuinely helpful. We spend less than $1000 a year.
At most I advertise my for-profit website and try to gain personal fame, but if I was trying to do those 2 things, I'd spend it directly on those 2 things.
Kids benefit and I second-hand benefit.
This article is mostly about universities and hospitals. Not really clear how either of those could possibly pass 75% of funding through to the community.
They'd just redefine salaries as "funding through to the community" - which, if we step back, they kind of are.
Find a university located in a small town and work out how much of the town is dependent on the money flowing from the "gown".
> I believe that many (most?) non-profits are a combination of grift and money laundering.
Actually most non profits are a massive jobs program for the middle and lower middle class. The side effect is that some problems that the government or the private sector won’t touch, get a slight more attention while providing tax benefits to people who contribute.
This would be great. I would also like to see non profits close shop once their goals are reached or fail rather than transform into a new thing just so the top people who make up the organization can continue to have a paycheck.
That's kind of the fault of grant givers.
Nobody wants to give you a huge grant to continue doing what you're already doing, you only get grants for doing something completely new and grandiose. If you're lucky, you may get like 20% of the grant to cover your other expenses that don't come with a caveat of having to spend it on something completely new.
They're a structure to compensate for the lack of state power created by us burdening our instruments of government with overwhelming requirements as much as I suspect that all we did is move the location where crimes were committed. I doubt the direction to success is through burdening these successor organizations with requirements. I suspect it is through reducing the constraints upon our governments - though how one would go about that in the face of highly-organized directed interests is an unsolved problem. Certainly, no one has yet come up with a scheme where firefighters' unions cannot impose rent-seeking requirements like FARS upon the remainder of society. Perhaps I'll take the chance to make a grand proclamation or 'hot take': "America will succeed or fail in the next century depending entirely on her ability to solve rent-seeking".