The New York Times commented yesterday (registration required) on the problem that humanitarian NGOs such as the Red Cross are having with earmarked donations. When too many donors say that 100% of their money has to go to a specific cause, NGOs aren't able to react to sudden issues or less-publicized crises. They also have trouble paying their non-emergency bills – like headquarters salaries. Like anyone whose every worked with an NGO, I have experienced this debate, and it isn't just private citizens who do it. Governments can be just as bad about forbidding institutional spending.
It is understandable to want our money to go to those in need, not NGO staff. Also there some NGOs that charge unconscionable indirect costs to their projects. But some indirect costs have to exist and provide value to activities. As just one example, any analysis of a failed humanitarian effort will tell you that a key problem was lack of sufficient planning. Unfortunately, most emergencies happen fast enough that planning is seen as a luxury. Indirect costs from projects help fund positions in headquarters and field offices to monitor potential crises, allowing them to plan ahead and put a quality project on the ground.
Choosing where to give a charitable donation is a tough choice. Like choosing a stock you need a lot of information, and then just use your gut. like to use Charity Navigator to learn about NGOs before I give. It doesn't tell the whole story on the NGO, but it is a great start.
