After a rather spicy lunch at a TC restaurant I was really in need of a breath mint before I could face my next client. As I paid my bill I noticed on the counter a collection box selling mints in the name of a well known charity. I dropped my 50¢ in the box, picked up my mints and started to wonder if the charity on the box really gets all the money I put in? Like you, I assumed that all or most of the money is going to the charity. But according to the Better Business Bureau that’s not always the case.

I was surprised to find out that Charities that rely on coin collection devices -- cardboard stands, canisters, plastic containers, or gumball or candy machines-- as a means of fundraising may receive all the money that is collected, but sometimes the charity receives a flat, minimal monthly fee per device.

Most of the time, those Charities which relay on those cardboard stands and metal canisters, do their own solicitation or relay on community volunteers to distribute and pick up the collection devises. If done in this manner the costs are held in check and the procedures are well defined and controlled, which benefits the charity and the recipients of their good work.

In other instances, according to the BBB, the coin collection devices may be operated through a third party, rather than the charity itself. It works this way, the Charity and an independent business person enter into an agreement where the person purchases the device, places the Charities name on it and then places it out in the community. That person then “works” the machines and sends the charity a flat amount (perhaps a couple of dollars for each device per month) and keeps the remainder of any money collected as profit.

In addition to the collection canisters all around us I was amazed at the number of vending machines, gum ball machines and candy machines that have a charities name on it. These too are found to have a similar situation. A third party places the machine in a retail business and pays the charity a small fee or percentage per month to use their name.

It’s a little disheartening to think that the coins you put into a charitable collection box might be going to into someone else’s pocket rather then to the charity whose name is on the machine. It’s like when you hear that “all the profits from this fund raiser will go to so and so charity”. Who determines the expenses or the profit?

I can understand a charity looking to get as much money as it can to provide the services to its community. I’m sure that they look at it as getting a small percentage is better then not getting anything at all. But to me it’s a matter of ethics. If 80¢ of every $1.00 goes into someone else’s pocket I want to know about it.

So how do you know if the charity you think your supporting is getting the majority of the money or is it going to someone else? The Better Business Bureau publishes a quarterly report called the Wise Giving Guide, which evaluates various charities and it also has a list of those charities which are part of the Wise Giving Alliance on its WEB site (www.bbb.org) that you can access and review. Each year the Readers Digest also publishes a “best of” list which has charities on it. The best way to know if the charity you’re giving to has a low expense ratio is to call and ask for their annual report. Charities that have high administrative costs aren’t being as effective as they could be.

The Better Business Bureau offers the following points that consumers may wish to consider before donating their change to coin collection devices:

• Make sure the device clearly identifies the charity and lists an address or telephone number which you could contact for more information.
• Be aware that there can be fundraising costs associated with the various devices. Don’t assume that all money collected will go to the indicated charity.
• Make sure that the device is safely secured before making a donation that could end up in the hands of a thief.

Finally, under no circumstances am I advocating not giving to charities because there might be a remote chance that they don’t get the majority of the money you drop into the canister. Like anything else you need to know who you are dealing with, so do your homework. I use to have an office in Chicago and I would carry McDonald’s coupons with me so when approached by a panhandler looking for money to “get something to eat” I would give it to them. I am a firm believer in truth in advertising. Tell me your hungry and I’ll help you get food. One day I handed it to one gentleman and as I got a few steps away he throw it at me while telling me he needed “cash to buy wine not a damn hamburger”. His honesty was so refreshing that I went back and gave him some change. In this case I knew where it was going and that 100% of it was going to be used as promised. What more could I ask for?

Fred L. Goldenberg is a Certified Senior Advisor and the owner of Senior Benefit Solutions of Michigan. He is also a founding member of the Senior Resource Alliance of Northern Michigan