Why Charities Are Failing and a Better Way to Give

By Ken Stern

Doubleday. 258 pp. $26.95

The good news is that Americans are a giving crew. According to Ken Stern in his new book, “Charity for All,” there are 1.4 million charities in the United States that take in $1.5 trillion a year, and every year about 50,000 more charities are started. The bad news is that no one is holding these charities accountable.

“The public — and private — investment in the social sector is one of the critical elements of the American social compact,” he writes, “yet it is one of the oddities of public life that each year we renew this investment without ever pausing to ask the same questions that we ask of every other public and private investment: What are we getting in return, is the investment structured correctly, is the money going to the right places?” It’s this lax oversight, Stern argues in his eye-opening if depressing book, that is conducive to poorly run charities, charities with no proven, long-term positive effects and charities that are hardly charities at all.

In one chapter, Stern writes about the ease with which nonprofit status is given and how small a claim many charities — from hospitals to college and professional sports tournaments to the All Colorado Beer Festival in Boulder and Colorado Springs (both college towns) — have on that description: “According to a Stanford University study, the IRS has approved more than 99.5 percent of all charitable applications. This statistic reveals the first troubling truth about our process for deciding what is a charity and what is not: we don’t have one.” Eventually he does find a few charities that are doing it right, such as Youth Villages, a home for troubled youth that was started in Tennessee. The best charities, he notes, “are built over time and are able to go the distance only with painstaking planning and self-scrutiny.”

’With Charity for All: Why Charities Are Failing and a Better Way to Give’ by Ken Stern (Doubleday)

Unfortunately, he doesn’t suggest a magical Web site or book that donors can peruse to ensure that their money is being put to good use. It takes time and research to know and understand a charity’s finances and real, fact-based success. But Stern is calling for donors to do just that: rethink the way they give in order to be the impetus for change. “The public must begin to see donations as investments,” he writes, “and people must take charitable giving as seriously as they do investing in the stock market. This is the critical first step toward creating a new market discipline, a new culture of effectiveness, and efficient, results-oriented service.”

— Moira E. McLaughlin