Before You JustGive
published in April 2012
JustGive is one of a growing number
of websites that, for a reasonable fee of 4.5% per contribution,
processes donations for people wishing to give to charities online.
This is seen as a convenient service by many donors who like the
ability to go to a single website to make donations to several charities
at once. But JustGive wants donors to think of it as more than simply
a convenient place to donate. On its website it purports to help
donors choose where to make their donations by directing them to
its "JustGive Guide," a nineteen-category collection of 1,000 "recommended"
charities which it claims have met "stringent public requirements."
CharityWatch thinks most donors will be surprised to learn just
how little the charities featured on JustGive's website have been
CharityWatch scoured the JustGive site
to find out what "stringent public requirements" a charity must
meet in order to qualify for its Guide. These were nowhere to be
found. We then contacted JustGive and were told that charities appearing
in their Guide have met the following requirements: They are public
charities incorporated in the U.S.; have filed tax forms with the
IRS; make a current financial statement available to the public;
have a mission that has a national scope or audience; are in good
standing with government agencies that monitor charities; and have
reasonable fundraising or administrative costs.
Most of these are hardly "stringent public
requirements" by even the loosest definition; rather, they are the
most basic legal requirements a charity must meet in order to exist
and solicit the public. Narrowing down its list based on whether
or not the included charities have a mission with a national scope
is perfectly fine, but is not what most donors would think of as
a "stringent" requirement. Determining whether or not a charity's
overhead costs are reasonable is very helpful to donors, so we asked
JustGive how it makes this judgment for the charities in its Guide.
JustGive indicated that it considers fundraising and administrative
costs reasonable if they make up less than 25% of a charity's total
revenue, but confirmed that it simply takes what the charity reports
at face value without question; it does not perform a financial
analysis to adjust for inherent inconsistencies in charity financial
reporting, or check and adjust for any incorrectly reported information.
Charities often report expenses that
most donors think of as overhead, such as payments made to professional
fundraisers, in their program expenses. CharityWatch does not think
that computing an overhead percentage without analyzing the numbers
behind it provides reliable information to help donors select efficient
charities to support. Because JustGive describes its criteria as
"stringent," many donors likely think that JustGive has thoroughly
checked out the charities it recommends. Given its minimal standards,
it is not surprising that JustGive's Guide includes groups like
Humane Society of the United States and American Institute
for Cancer Research, which are rated D and F by CharityWatch,
respectively, for spending paltry amounts on their programs and
maintaining high fundraising costs.
CharityWatch asked JustGive if it thought
that "stringent" was a fair description of the minimal criteria
it uses to vet the charities it recommends. The group responded
in agreement with CharityWatch's criticisms about its use of the
phrase "stringent public requirements" to describe its criteria,
and said that it is "moving away for (sic) using this language"
on its website and in other communications. At the time of publication
this language has not been removed. See update below.
JustGive also told CharityWatch that
it looks favorably on charities that have received funding from
major foundations when considering new additions to its Guide. According
to the group, "Charities who have received funding from the top
100 foundations generally have to go through extensive reviews of
their programs and financials." While some foundations do screen
certain grant recipients, it is wrong to assume that just because
a charity has received a grant from a foundation it has been thoroughly
checked out. Grant making can be a fickle process and grant decisions
are often made for a variety of reasons, such as personal relationships,
political or business motives, or eccentric personal preferences
that have nothing to do with program quality or financial efficiency.
JustGive should not recommend charities to donors based on the presumption
that foundations routinely screen their grant recipients' programs
and financial reporting.
JustGive allows donors to give to over
a million nonprofits via its website. To help donors pare down this
overwhelming selection, it promotes the charities it recommends
by attractively breaking them out into nineteen categories such
as Animals, Children, and Peace, in order to "make your search easier
and faster," according to its site. The group also advertises on
its site that it wants JustGive.org to be "the online destination
for charitable giving," and promotes a number of other goods and
services such as charity gift cards, charity wedding registry, charity
gift collections, memorials, and special events fundraising.
CharityWatch worries that JustGive may
be using its charity recommendations as a means of differentiating
itself from other donation processors in order to attract more donors
to its site who will purchase other goods and services. For example,
JustGive advertises a wedding registry service where a percentage
of purchases from corporate partners can be directed to charity,
and sells site set-up and development services to businesses that
want to encourage charitable giving among their employees. It also
sells charity gift cards, which a person can purchase for a friend
or family member who may in turn use the card to make charitable
donations. JustGive earned $608,000 in corporate licensing, and
$156,000 from unredeemed gift cards and uncashed donations, according
to its fiscal 2011 audit. JustGive acknowledged that it records
income equal to 85% of the balance of unredeemed gift cards after
one year and the remaining 15% after four years. JustGive also earned
revenue from processing about $35 million of charitable donations
Websites like JustGive provide a service
to donors by making online giving convenient and easy. However,
it is unfortunate that JustGive recommends 1,000 out of the approximately
1.8 million nonprofits in the U.S. based on such minimal and vague
criteria. CharityWatch cautions donors to not base their giving
decisions on JustGive's superficial recommendations.
2012 Article Update: After CharityWatch posted concerns
about JustGive on our website earlier this year, it has since discontinued
using "stringent public requirements" on its website to describe
its criteria for vetting charities. However, it continues to recommend
only 1,000 out of "more than 1.8 million charities" based on the
extremely minimal criteria of being "nationally-based" and meeting
"IRS standards." The IRS does not measure or claim to measure how
efficiently or effectively a charity uses donors' contributions
to support its programs. A charity can spend as little as 1% of
its expenses on programs and still be in compliance with IRS standards.
CharityWatch is pleased that JustGive is now describing the criteria
it uses for its charity recommendations more clearly on its website.
However, because JustGive's criteria for vetting charities is so
minimal, CharityWatch cautions donors to not select charities to
support based on JustGive's recommendations.