ECONOMICS REPORT - Giving to the Needy, and Making Sure the Money Is Well-Spent
By Mario Ritter

Broadcast: Friday, December 23, 2005

I'm Steve Ember with the VOA Special English Economics Report.

Americans gave almost two hundred fifty thousand million dollars to charity in two thousand four. It was a five percent increase to a new record for giving in the United States. The estimates are from the Giving USA Foundation. The group says about seventy to eighty percent of Americans give yearly to at least one charity.

 
Richard Hamilton of the Detroit Pistons basketball team helps buy holiday gifts for 9-year-old Shakima Johnson, displaced from her Mississippi home by Hurricane Katrina. At right is her mother, Wykima.
Charities are non-profit organizations. They might raise money to provide services, or to support the social good.

Americans can reduce their taxes by giving to charities. The federal tax agency, the Internal Revenue Service, recognizes donations to official charities. But many people give to charities even without saving on the taxes they owe.

Individuals provide about seventy-five percent of all donations. The largest share of charitable giving goes to religious groups. The Giving USA Foundation says more than thirty-five percent of all giving in two thousand four went to religious organizations. Some Americans give a percentage of their pay to religious groups.

Schools and other education-related organizations were second on the list. They received about thirteen percent of all charitable giving in two thousand four.

Many people want to know how their gifts are being spent. They want to be sure the money is not wasted or misused. Not long ago, in the Washington, D.C., area, the local leader of a national charity stole nearly half a million dollars from the group.

There are organizations that examine how charities spend the money they receive. These groups include Charity Navigator and the American Institute of Philanthropy. They also include the Wise Giving Alliance of the Better Business Bureau. Such groups provide reports or ratings that measure how effectively charities spend money.

Charity Navigator says seventy percent of the groups it studies use at least three-fourths of their money to support their causes. Charities that spend too much on administrative or operating costs are not considered to be carrying out their purpose.

Charity-rating groups get information from a tax document called Form Nine-Ninety. Charities are not taxed, but they must report their financial information each year to the Internal Revenue Service.