Fraud in the Name of God?
How effective are
faith based organizations?

by Charles Henderson

In reaction to an editorial about President Bush's decision to move ahead to provide federal funding and support for "faith based" organizations that deliver services to the poor, I have received numerous comments from Christians who believe that a compelling reason for supporting the President's initiative is that religious organizations are more effective than other agencies. That is, they are more efficient at delivering help to the people who truly need it than secular or government organizations. In many people's minds the very term "government" is a synonym for waste and corruption. Government programs are run, as we all "know," by bureaucrats and are hampered by needless "regulations and red tape" that prevent real help from ever arriving where it is most needed.

One such note came to me from Tony who makes the point against government and for faith based organizations very clear: "The administrative costs of government welfare programs is 76%. Only about 24 cents of every dollar the government spends actually goes to the people in need. The administrative cost of faith based organizations ranges from zero to 10%. Some programs are actually cost free because everything is donated. Imagine how effective our tax dollars would be in the hands of those who run such programs. Imagine the multitudes of people who could be helped. Imagine how many billions of dollars would have been saved if the relationship between faith based organizations and government had been in existence in previous years as President Bush desires."

Now admittedly I am not an expert on government programs, but I do know something about religious organizations, having worked for more than 35 years within Christian churches and other "faith based" organizations. I know something about the funding of such organizations, having been responsible for fund raising and budgeting in these organizations for my entire professional life. What really struck me about Tony's note was his view that there are some faith based organizations that spend nothing on administration and are able to deliver 100% of what they raise directly to those in need. He suggests that the most a faith based organization will ever spend on administration is 10%. The range being, according to Tony, 0% to 10%.

Some research into Tony's background reveals that he is no ordinary web surfer. Tony is, in fact, the author of a book on this topic: "Jesus, Politics and the Church" by Tony Nassif. Readers of this editorial are invited to check out his website. In other words, Tony purports to be an expert on this topic in a position to advise others on how to spend their hard earned money, as well as advocating for changes in government policy based upon his expert knowledge.

The idea that faith based organizations spend as little as 10% on "administrative costs" while sending 90% to those in need is pure fantasy. Any organization involved in direct service to the poorest of the poor will of necessity spent a very large percentage of budget on salaries, for example, as working with people is labor intensive. No program worth its salt simply hands out money, food, housing, etc. Rather the challenge is to motivate human beings to change their lives. This is expensive no matter who runs the programs. Even a program designed to distribute donated food, for example, would involve substantial "administrative costs" in the form of storage facilities, liability insurance, transport, distribution, etc. The biggest item in any program designed to address real problems of real people is for the salaries of those delivering the services. This would be true whether the salaries go for "government bureaucrats" or "dedicated servants of God." Spinning the words used to describe those who labor at tasks like feeding the hungry or speeding relief for disaster victims around the world does not change the reality of the situation: such persons, whether they are employed by "faith based organizations" or secular relief agencies funded by government, must be paid. A Boeing 727 chartered to deliver medical supplies to a nation in Africa will be flown by qualified pilots no matter what sort of organization charters the plane. Chartering airplanes or trucks is not "cost free."

Since I was indeed quite skeptical of Tony's facts, I wrote to him, asking for the names of organizations that he believes spend little or nothing on administrative costs. Tony came up with a list. At the very top of his list was Pat Robertson's Operation Blessing, which Tony cited as spending only 1.4% of its budget on administration and by implication, 98.6% of every dollar donated going directly into the hands of those in need.

I looked up the tax returns for Operation Blessing on the Internet. Here is what I found. To be sure, on the front page of this "faith based" organization's tax return under the category "management" there is a figure of $745,416 for the year 1999 out of a total budget of about 36 million. Is that what Tony has in mind when he speaks of "administrative costs?" Even that exceeds the 1.4% that Tony mentions. But the plot thickens quickly. Deeper into the report amounts for what most rational people would refer to as "administration" are listed as follows: fund raising: $2,219,902; salaries $1,100,240; staff travel $605,624.

Other big ticket items include employee pension and retirement benefits, legal and accounting services, postage, shipping, telephone. In short, all the things I would have said are part of administration and certainly is not money going directly to those in need. The total of all these administrative items comes to over $11 million, leaving a balance of $25 million for "services to individuals and organizations."

At this point we have 30% of Operation Blessing's revenues going, according to its own reports to the IRS for administration -- triple what Tony believes is the very most any such organizations spend on administration. But the plot thickens even further. A large portion of the remaining $25 million does not go to individuals, but rather to "organizations" that are providing the actual services to individuals. Here the trail becomes murky as one would have to follow the money through the finances of each of these organizations to find out what percentage of their income, including the income from Operation Blessing, goes for administration.

I'll wager that an additional percentage -- if the are as "efficient" as Operation Blessing itself the figure would be 30% -- is sliced off the top of the money they receive from Operation Blessing to pay for THEIR administrative expenses. That being the case, we would have about half of all donations to Operation Blessing reaching those who are truly needy.

If Operation Blessing were a government agency people would be outraged at this discrepancy between the figures being circulated as its "administrative costs" and its actual costs of operating. More than two million dollars spent in one year on fund raising? Six hundred thousand on travel? If this were a government agency people like Tony would be crying "Foul!" and "Fraud!" Congress would be holding an investigation to find out who was responsible for such blatant deception.

I use this not to diminish the importance of what organizations like Operation Blessing can accomplish. I would not be surprised at all to find that Operation Blessing is in fact an efficiently run organization managed by dedicated people of faith who are doing the very best they can to address dire human needs. Let there be more of such people and may the work of Operation Blessing prosper! But people of faith need to be as scrupulous as any others in telling the truth about how expensive it is to deliver real help to real people. Suggesting, as Tony does, that faith based organizations can miraculously defy the laws of economics and assist people without spending ANY money in doing so (that's what 0% for administration would amount to) is down right deceptive. Perpetrating a fraud in the name of God is wrong. Doing this to justify sending tax payer dollars to "faith based" organizations in the mistaken belief that such organizations can work miracles of efficiency not only violates the ethical norms that apply to religious and secular organizations alike, but in the long run is certain to backfire, causing grave harm to those truly effective organizations that are trying the hardest to make a real difference.

When faith based organizations, seeking government funding, come under the closer scrutiny of government as a condition of receiving help, the degree of deception involved on the part of those who advocate on their behalf will suddenly come into the light of day. This may result in widespread disillusionment on the part of millions upon millions of Christians who have contributed to such organizations under false pretenses.






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