As the season for giving approaches, it is time to determine if and where you’ll be donating. Ken Stern, the former head of a major nonprofit reveals the surprising failings of the charitable world—a shocking 1.4 million separate organizations that make up 10 percent of the U.S. economy. Counterintuitive, provocative, compulsively readable, With Charity for All: Why Charities Are Failing and a Better Way to Give (Doubleday; On Sale 2/26/2013; $26.95) creates a new paradigm that will be a game changer for the charitable sector and will transform every American’s relationship to their end-of-year giving.
During his years as the CEO of National Public Radio, Ken Stern became aware that working for a nonprofit was like entering a looking-glass world where the marketplace incentives were utterly perverse. The experience set him on a journey to explore the vast and unaccountable world of U.S. charities. From water charities that serve Africa to the policemen who provide drug education in public schools, from the Metropolitan Opera to college bowl games, he discovers a huge, mostly well-meaning charitable sector that is nonetheless hobbled by deep structural flaws.
Unlike private corporations, which respond to market signals, adjust strategies and go out of business when they fail, nonprofit organizations have a very low barrier to entry (the IRS approves 99.5% of applications) and once begun basically never die. Groups that rate charities use deeply flawed measures, such as the percentage spent on overhead costs, a measure that actually deters charities from making much-needed investments. The problem, according to Stern, lies in a fundamental lack of oversight. Charities are rarely asked to prove their effectiveness to their funders, whether private donors or government grants. When they are, charities themselves define their own success, results that do not paint an accurate picture.
The stories of charities that spend millions despite never even cracking the problems they set out to solve (D.A.R.E, Red Cross and most water charities, sad to say) are devastating. But it’s not all bad news. Stern explores a growing movement toward nonprofit accountability and effectiveness and offers a prescription for individual giving and reform. With Charity For All is an intriguing book and its equal analysis of the charitable sector will have readers reevaluating the ways in which they give.
ABOUT KEN STERN
Ken Stern is the CEO of Palisades Media Ventures, a digital media content company and the former CEO of National Public Radio (1999-2008). He lives in Washington, D.C.