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Give Smarter

Brea from Uganda, Mauricio from Nicaragua, Lukshika from Sri Lanka, the list went on.

Picture after picture on the Compassion International website showed children, from infants to

teenagers, who lived in third world countries and needed financial support to survive and receive

a basic education. A few of them smiled, others looked angry, but most of them held somber

expressions with deep gazes that seemed to pierce through the computer screen straight into my

heart. My parents told me and my sisters to pick a child to sponsor, but it was impossible to

choose just one out of so many. For the first time, I became aware of the extreme poverty that

affected people from all over the world and I felt hopelessly overwhelmed. I wanted to help all of

them. We eventually decided to sponsor a six year old boy from Rwanda named Harambineza

Jean Claude because that day happened to be his birthday; however, there were hundreds of other

children who continued to wait for someone to show them compassion.

Convinced that charities were the best way to fight against poverty, I was determined to

support more of them. Like Compassion International, Operation Christmas Child is a charity

organization that sends shoeboxes filled with toys and hygiene products during the Christmas

season to children in third world countries. Participating in this annual event became a family

tradition, sometimes with friendly competition over who can fill the most shoeboxes. Rather than

a crazy shopping spree at the mall on Black Friday, I looked forward to going to the dollar store

to buy Christmas presents for the shoeboxes. Toothbrushes, colored pencils, and stuffed animals

would fill my basket until the handles slipped down to my fingertips and the bottom scraped

against the floor. After wrapping and filling the shoeboxes at home, my family dropped them off

at our church so they could be sent and distributed to children around the world. I believed that

my involvement in charities would somehow eradicate poverty.

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It was years later when I started to wonder how charities actually worked. My older

sister, who is studying missions and intercultural relations in college, explained how some

charities could be more effective than others. For example, the dollar store trinkets we sent every

year through Operation Christmas Child were not teaching children marketable skills or creating

a stable source of income for families. They would be interesting for a while and then get tossed

aside a few weeks later. On the other hand, Compassion International puts people’s donations

towards providing children and their families with academic education, medical care, and

business support. I became curious about how different uses of monetary donations affected a

charity’s impact on their target group of people, leading me to the question: Are charities

effectively helping people in poverty?

Poverty levels can be measured in multiple ways, which allows people to evaluate trends

and set goals. In 2015, the World Bank constructed the World Development Indicators in order

to assess the gross national income of each country and divide it by their total population. The

global average per capita income was calculated to be $42.20 per day, and forty-five countries

fell below a quarter of the average at $10.50 per day. The top 25 poorest countries, two-thirds of

which were from the African region, were below $6.00 per day (Atkinson 16). Although these

statistics were calculated based on accurate data of all the countries’ average per capita income,

they do not completely reflect poverty levels because the wealth is not equally distributed within

those countries. For example, America is not exempt from poverty. The American federal

government established the poverty line at $12,784 a year for an individual. In 2018, about 11.8

percent of Americans were living in poverty, making less than their poverty thresholds. In 2019,

about 5.3 percent of Americans were living in extreme poverty, making less than half of their

poverty thresholds (“The Population of Poverty USA”). Even though poverty is mostly prevalent

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in other parts of the world, America is not exempt. There are still poor people living in wealthy

countries and rich people living in poor countries.

For a more accurate picture, poverty is also measured at an individual level. The UN set

the international poverty line at $1.90 a day for an individual, and by this definition, about 736

million people or ten percent of the population lived in poverty in 2015. This is an improvement

from 16 percent in 2010 and 36 percent in 1990; however, the data indicates that extreme

poverty will persist in small, unstable countries and concentrate in Sub-Saharan Africa by 2030

(“Ending Poverty”). A family living on less than two dollars a day cannot access the food, water,

healthcare, housing, education, and other basic supplies that they need to live. Children, who are

still growing and learning, are the most vulnerable to the dangers of poverty. Without proper

food, their young bodies become more susceptible to diseases and without education, they are

unlikely to break the cycle of poverty in their family. By 2030, UNICEF predicts that “167

million children will live in extreme poverty, 52 million children under age 5 will die between

2019 and 2030, [and] 60 million children of primary school age will be out of school”

(“Children”). Unless people take action now, the effects of poverty will continue to harm the

lives of millions of people around the world.

With the evidence presented, poverty has proven itself a formidable opponent and

charities are rising to fight against it. A charity is a non-profit organization that uses public

support and donations to benefit society, while adhering to certain regulations and guidelines. In

order to form a non-profit organization, the IRS must approve of its purpose and administration

and then the organization can file the IRS Form 1023 to become certified as a 501(c)(3). This

status allows the organization to receive tax exemption with the purpose of encouraging them to

further their positive impact on the world. Donors also receive a tax deduction on their federal

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income tax, which incentivizes charitable giving (“What Is a 501(c)(3)?”). Even without the tax

deduction to encourage donations, a lot of people care enough about helping others who are

living in poverty that they are willing to give a percentage of their money towards charities. In

2018, the average American supported 4.5 charities and about 69 percent of the American

population donated towards a charitable cause (“2018 Online Giving Statistics, Trends &

Data…”). All of the money charities collect from the public must be used to benefit society and

achieve their goals.

Even though many people donate to charities, there are many more people still living in

poverty. This is because charities do not only use their money directly towards serving the poor.

There are other expenditures, such as administration, advertising, and commercial activities, that

are necessary for a charity to function. A charity’s spending ratio compares the money spent

directly on its end cause and the money spent elsewhere to indirectly support its cause (“What

Percentage of Donations Go to Charity”). However, a low spending ratio does not necessarily

mean that the charity is not using its money efficiently. For example, one charity might have a

low spending ratio because it spends most of its donations on fundraising rather than

immediately helping the poor. But effective fundraising could potentially raise even more money

for a charity, which would later be used towards the end goal of fighting against poverty. On the

other hand, another charity might have a high spending ratio because it spends most of its

donations directly towards their end mission without focusing on fundraising. In the end, both

charities would use the same amount of money on helping others (“Charitable Spending”).

Charities must spend some money in order to get more money. Fundraising is one way charities

can reach out to people and gain more support from the public; however, charities must stay

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focused on their purpose of helping people. As long as charities keep their original goal in mind,

fundraising can be an important investment.

Along with fundraising, charities need to spend money on administration. As the director

of both Children’s Ministries and Awana at Northcreek Church, Kelly Alexander works with a

variety of children and understands the importance of administration. However, she emphasizes

the need for charities to keep their goals in mind by stating, “There are some charities where… a

lot of [the money] goes to the administration… It is important because they organize and execute

what’s going on, but I think people can take advantage of that too.” Donors should be wary of

fraudulent charities; however, like fundraising, administrative costs can help a charity become

more effective. Administrative costs, also known as overhead, is one way people evaluate

charities that does not always reflect the full picture. Overhead costs, which include training

workers and organizing programs, can be compared to parents who invest in college tuition for

their children (“What Percentage of Donations Go to Charity”). But the executives of non-profit

organizations are pressured into spending less on overhead costs or lie about it in order to appear

more efficient in the public’s eyes. According to the Bridgespan Nonprofit Overhead Cost Study,

almost 13 percent of publicly operating charities reported that they spent nothing for general

management purposes; however, it was later revealed that about 80 percent of these charities lied

on their reports. The leaders of this study, William Bedsworth, Ann Goggins Gregory, and Don

Howard, further explained the extent of this problem:

As unrealistic overhead expectations place increasing pressure on organizations to

conform, executive directors and their boards can find themselves under-investing in

infrastructure that is necessary to improve or even maintain service-delivery standards,

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particularly in the face of growth. In the short-term, staff members struggle to “do more

with less.” Ultimately, though, it’s the beneficiaries who suffer. (6)

While overhead costs and financial transparency are important factors in determining a charity’s

effectiveness, they can be misleading. Instead, people should carefully examine a charity’s

demonstrated success before giving them large amounts of money. As long as charities continue

to help and serve those in need, the people’s donations will be used for a noble cause.

Charities fight against injustice and poverty in different ways according to their target

population. Youth with a Mission (YWAM) is a Christian organization that strives to empower

the younger generation through outreach ministries and evangelism. Danica Bless, who is part of

the Outreach Department of YWAM San Francisco, understands that people have different

needs. She explains her work by stating, “Here in the Tenderloin we hand out hot chocolate and

meet with people where they are at, we talk and pray with them while drinking a warm cup of

hot chocolate but ministry is going to look different in North Beach.” The Tenderloin district is

the center of the homeless population in San Francisco, whereas North Beach is a wealthy

neighborhood in the city. Bless and the other YWAM missionaries try to identify the needs of

their target community in order to effectively share the gospel. Alexander, from Northcreek

Church, has participated in international missions trips to Indonesia and Mexico and further

emphasizes the importance of building trust and relationships with the people in the community.

She states, “But if we are helping them meet those tangible needs, whether it be housing or food

or whatever they really need, and also bringing the gospel to them then I think it is very effective

because… we earn their trust, we build relationships with them.” Both Bless and Alexander

believe that people need more than food, water, and shelter -- they need community and

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relationships with people who care about them. By evaluating the specific needs of their target

group, a charity can become more practical.

If money is used efficiently, it has the power to change many people’s lives. Charities

that only hand out money and food to the poor are essentially ineffective because those people

will continue to be dependent on charity for the rest of their lives. Bless from YWAM asserts

that “unless the systemic injustices are being addressed charity is only like a bandaid being put

over poverty.” A bandaid will not heal an infection without any medicine, and free handouts will

not solve poverty without a fundamental change to the system. Five years later, Harambineza

Jean Claude is now 11 years old and continues to receive education and healthcare through

Compassion International’s sponsoring program. Compassion International used the sponsor

donations to purchase a goat for Harambineza’s family, which became a reliable source of food

and income. In a recent letter, Harambineza described how his family celebrated the new year

with delicious food and sowed sorghum in the rainy season. In this way, Compassion

International is equipping children in third world countries with knowledge and marketable skills

that might help them earn their own money in the future. Charities that target the root of the

problem are the most effective in fighting against poverty.

While charities are not the sole factor, poverty levels have been generally decreasing

around the world. The percentage of humans living in poverty has decreased from 36 percent in

1990 to 16 percent in 2010 to ten percent in 2015 (“Ending Poverty”). The progress may be

slow, but the downward trend predicts even lower poverty levels in the future. In the United

States, poverty levels have been slowly decreasing since 2012 and were measured at 13.1 percent

in 2018 (U.S. Census Bureau). At the same time, the rates of charitable giving have gone up,

increasing from four percent in 2016 to five percent in 2017 (“2018 Online Giving Statistics,

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Trends & Data…”). Even if charities are not fully responsible for this change, the correlation

between a downward trend in poverty levels and an upward trend of charitable giving is

encouraging. Together, charities and those who support them can work together to end global

poverty.

Most people do not have the time or desire to travel to third world countries and serve the

communities there, so they give to charities instead. We trust charities with our money and

believe in their cause, but we may never see a tangible result or improvement. Despite the many

charities and non-profit organizations, there are still millions of people who live in poor

communities and unsanitary conditions. Charities appear to be spending money on unnecessary

fundraising and administrative costs, instead of actually helping people. However, after

thoroughly researching how charities work, I have realized that they can be very effective. In

order to maximize their impact, charities must spend a certain amount of money on overhead

costs to sustain and improve their systems and strategies. After identifying the specific needs of

their target population, charities can efficiently provide services and build relationships with the

people. A charity should not only address the immediate issues, but also consider long-term

solutions that will break the cycle of poverty. Rather than being discouraged by the fact that

millions of people live in poverty, donors should conduct their own research on the charities they

support to investigate where their money is going and how it is making an impact. Give smarter,

and the world might change faster.

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Works Cited

Alexander, Kelly. Children’s Ministries director and Awana director at Northcreek Church.

Personal Interview. 1 March 2020.

Atkinson, Anthony Barnes., et al. Measuring Poverty around the World. Princeton University

Press, 2019.

Bedsworth, William., et al. “Nonprofit Overhead Costs.” The Bridgespan Group, April 2008.

PDF file.

Bless, Danica. Outreach Department at YWAM San Francisco. Personal Interview. 6 March

2020.

“Charitable Spending.” How Charities Work, howcharitieswork.com/transparency-and-

accountability/charitable-activity/.

“Children.” United Nations, United Nations, www.un.org/en/sections/issues-depth/children/

index.html.

“Ending Poverty.” United Nations, United Nations, www.un.org/en/sections/issues-depth/

poverty/.

“The Population of Poverty USA.” Poverty USA, www.povertyusa.org/facts.

“2018 Online Giving Statistics, Trends & Data: The Ultimate List of Giving Stats.” Nonprofits

Source, nonprofitssource.com/online-giving-statistics/.

U.S. Census Bureau. “Percentage of People in Poverty Dropped for the Fifth Consecutive Year.”

The United States Census Bureau, 26 Sept. 2019,

www.census.gov/library/stories/2019/09 /percentage-of-people-in-poverty-dropped-fifth-

consecutive-year.html.

“What Is a 501(c)(3)?” Foundation Group®, www.501c3.org/what-is-a-501c3/.

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“What Percentage of Donations Go to Charity.” America's Charities, 18 Feb. 2020,

www.charities.org/what-percentage-donations-go-charity.

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