Thursday, October 14, 2010


The pitchman said, “One hundred percent of all net proceeds is donated to …”

All of the emotional tugs and tearful hugs up to that point was having its intended effect. Purses, wallets, checkbooks were opening, debit and credit cards were getting ready. Most people would respond to the emotions. But there is a caveat.

Net proceeds.

Let’s say I’m offering a nice looking lapel pin for your donation of $1 and that I’ll give the net proceeds to charity. The pin cost me 15 cents to produce. After all, it really is a nice looking pin, all shiny and sparkly and noticeable, and those Chinese workers do have to get paid something. Then there’s shipping and handling – say 45 cents. Handling is always this nebulous charge, also known as a profit center. Add the promotional costs, administrative costs, and miscellaneous costs of, maybe another 30 cents. So far the gross cost is 90 cents of the $1 you’re donating. That leaves 10 cents. Oh, but I forgot the 7 cents in “other necessary” costs. So now we’re down to 3 cents out of that $1 you’re giving me. That’s the net proceeds.

Three cents. Not much real money going to help those in need, is it?

I’m not saying that all charities have such high costs. I am saying that the wise and careful contributor looks behind the tugs and hugs to see what how much of their dollar is really going to help.

But what happens if you donate $5 or $10 for that $1 lapel pin? Well, the unscrupulous will suddenly find that their shipping, handling, administrative, promotional, miscellaneous and “other necessary” costs increased. The net proceeds are, after all, a line item in the budget and may not be subject to change.

As we draw closer and closer to the holiday season, we are going to be subject to more and more appeals for our help.

Give generously. Give wisely.

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