The business of feelings: Recognizing dubious charities

Christmas was that time again: fundraising galas on all TV stations, appeals for donations in provincial newspapers and in the mailboxes of German citizens. They donate around four billion euros every year – an average of 115 euros per capita! It goes without saying that such helpfulness also brings charlatans onto the scene.

The extent to which charitable giving has become a matter of emotional commitment is shown by the fact that, especially in the run-up to Christmas, a particularly large number of initiatives appeal to our charity.

They send us postcards with foot-painted pictures, personalized return address labels with our name on them, and a lot more. Coldly calculated, we are taken to task for donating. If we don’t donate, we get the mailings as a gift. By doing so, we are causing damage to previously paid donations, we feel guilty.

Only large aid organisations can afford such advertising campaigns. But if you’ve donated to a large organization and then find out about a smaller one, you’re already feeling guilty of an omission.

Donating is chic and reassuring

“Fundraising” is a business with feelings: Using a lot of imagination to get as much money as possible for the organizations. In addition, there are patronizing gestures on the part of the donor, which are often used to ease a guilty conscience.

Eat first, donate later – a gala or charity banquet often serves an end in itself. Mostly it is about the self-presentation of exclusive ladies from sports or show business who want to be pictured in the right gossip column next to the right top dog. Not to mention the self-proclaimed Samaritans, for whom demonstrated compassion serves only to cultivate a public image.

The misery of those for whose benefit one pretends to dine there is quickly forgotten. Instead of spending the money on feasting, it would be better to donate it to social projects. In order to offer an attractive event, a much higher effort is often made than with pure fundraising. A considerable portion of the donations collected – up to 35 percent – is used to finance the respective organizations themselves. Among certified benefactors, advertising and administrative expenses average 16 percent.

Few people question the fact that raising money also costs money. The only question is whether these costs are disclosed transparently, whether they are reasonable and whether they cannot be reduced in individual cases. Exclusive banquets do bring in a certain amount of revenue for the respective organization, which is then often presented pathetically as a giant check. However, they usually do not have an immediate broad impact. In the process, organisations invest huge sums in campaigns whose immediate aim is not to alleviate need and misery, but to activate new donations.

It is in this fundraising marketing that many make their living. “Fundraisers” get paid by donors as social brokers for the illusion that their organizations are taking partial responsibility for making the world a better place. Misery and compassion are instrumentalized for fundraising. While the organizations point out grievances and present solutions at the same time, the donors provide funding and hand over their human responsibility. Donating thus becomes a form of mass consumption.

Only about half of fundraisers account for how the money is used

The willingness of German citizens to help not only helps many people in need. Organized philanthropy simultaneously feeds a gigantic benefactor industry. The big players in the sector, Caritas (Catholic) and Diakonisches Werk (Protestant) employ almost two million people, the Red Cross “only” 80,000.

The number of jobs at the five major organizations has tripled since 1970. With almost 500,000 employees, Caritas is the largest private employer in Germany. But who knows. This is due to the notorious secrecy of the benefactors. They like to talk about the good works, but the social enterprises remain in the dark. Turnover and cash position of welfare empires are usually unknown. And there is no comparative data on where work is done efficiently or sloppily.

Charity sanctifies the veil of opacity. Lack of economic efficiency is the result. They have billions of dollars in donations at their disposal, but only about half of fundraisers account for how it is spent. In addition, there are many larger and smaller aid organizations that have hunger, water, children, sick people or animals written on their banner. They all try to alleviate misery, lack and other needs with their projects, some of which span the globe, through the funds they collect.

We can’t do it without donations. But many people pay for the thrill of feeling like a do-gooder deep down. At the same time, they drink coffee in the morning that is harvested by poor people, often children, in the Third World. They wear clothes made under inhumane conditions in Asian special economic zones, where 14-year-olds are flogged in performance chord.

Giving buys us freedom from guilt – but only for the moment. Once you’ve become a donor, the requests pile up: potentially abused children, leprous sick people, mangled animal carcasses – the charity industry just needs to torture us a little more, and we’ll pay our way out with a donation. At the same time, we know that the demand for child prostitution or child labour – seen from the end of the production chain – comes from our countries.

The privileges granted by the state secure the cartel-like market position of the welfare sector.

• What do you donate to?
• What happens to the donations, how do they work?
• What is the real benefit of our donation?

Too many donations don’t reach the goal. They are lost to the organization and acquisition of donations. It’s other people’s money that fundraisers and charities spend on it. In addition to donations from private individuals and companies, these include distributions from the state gambling monopoly, donations from court-imposed fines, funds from nursing and health insurance and billions from the Federal Ministry for Economic Cooperation and Development (BMW).

In doing so, the benefactors refrain from using their profits for their own benefit. As a reward, they are recognized as charitable. Those who obtain the seal of approval are granted a wealth of privileges by the state. Non-profit has its price: it tempts to expensive inefficiency, while profit-oriented private providers are condemned to cost discipline.

The privileges granted by the state secure the cartel-like market position of the welfare sector. In the expensive cartel they work hand in hand: Undisturbed by competitors, Caritas & Co. negotiate care rates for old people’s homes or care costs for day-care centres with the funding agencies. By referring to their non-profit status, the charity sector feels immune.

There are many good and bona fide charities that give donors the opportunity to help

Whether for aid projects abroad or poverty projects in Germany – each donation euro can only be spent once. Many donors are not so well off that they would have anything to donate.

They do it anyway, out of sincere compassion, romantic self-exaltation, or at least the realization that only solidarity can bail someone else out. However, donors should be aware of the organization and the route their donation will take. There are many good and bona fide charities that give donors the opportunity to volunteer to support specific charitable causes. They are all worth supporting with their concerns.

For them, every donation counts. On the whole, only a few organizations engage in dubious fundraising, and they are not interested in positive charitable effects, but only in their own personal enrichment. Others lack the necessary expertise to plan and implement projects successfully. Their practices endanger the good reputation of the entire donation system. Every donation counts.

But donations should be made to alleviate hardship. There are plenty of those around the world. But no donor can seriously assume to be able to change anything in this overall picture by his contribution. His help is not even a drop in the bucket compared to the size of the planet. But if we look with a magnifying glass at a single place, we can see that this tiny and inconsequential donation can change many things there.

Many initiatives and aid organisations involve the people in the target countries in the design of their projects. Helping people to help themselves is the goal.

by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm

by courtesy of

www.kaden-verlag.de (published in CHAZ issue 01/2010, pages 52-54)

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About the author

Dr. Johannes Fiala
PhD, MBA, MM

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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