August 9, 2018 | Article

As an Advisor, when you’re working with your clients on allocating some of their wealth to charitable donations, it’s good to keep them educated about where their donation dollars are going. When we think of charitable or non-profit organizations, what comes to mind isn’t a CEO making a sizable paycheck, let alone one that exceeds $1 million.1 In a 2011 study conducted by Charity Navigator, top executives of some of the largest charities in the nation receive salaries upwards of the million dollars. “In its analysis of 3,929 charities, the charity research group found that 11 nonprofits paid their CEOs more than $1 million in annual salary and bonuses in 2011. CEOs at 78 of the charities were paid between $500,000 and $1 million.”1

At first thought, it’s a little shocking to hear that CEOs of charities get paid as much as they do. When individuals donate to a cause they’re passionate about, they’re thinking all of it goes directly back to the given cause. What many forget to take into consideration is the charity/non-profit is still an organization and has business needs.

In the case of the Red Cross, an average of nine cents per dollar is going to their expenses, including employee salaries and fundraising efforts.2 Naturally, that information isn’t always clearly stated when you’re making a donation. With that being said, it’s important to do some research on the charities that you plan on donating to. To ensure most of the donation you make goes towards the cause, CharityWatch advises to donate to charities that use at least 75% of donations for direct aid.2 This way, as a donor, you’ll have peace of mind that the majority of your donation will go towards aid.

As you’re doing your research, do still keep in mind the administrative expenses a charity or non-profit will accrue in operations, meaning that a portion of the funds will go toward expenses. However, it doesn’t mean that all charities have CEOs whom take home a huge paycheck. The study also noted that CEOs of charities that are devoted to animals and the environment tend to get paid slightly less than those who run organizations for human causes.1

From an Advisor’s standpoint, the transparency you exhibit as you’re helping them make these decisions can help to strengthen the relationship with your client. Helping them fully understand their financial decisions go a long way with individuals who don’t typically spend their day-to-day in the financial space.

If you find your hands full helping your clients research charities they’re considering donating to, is the perfect tool for you. RoboWholesaler was created to increase productivity for Financial Advisors. It offers you a fast, easy way to review fund performance rankings, get up-to-date fund fact sheets for top performing funds, and at-a-glance summaries of key fund information. The RoboWholesaler app is also now available for free in the App Store and Google Play.

1“Top charity CEOs pay exceeds $1 million” CNN Money

2“Where your donation dollars go” CNN Money


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