June 12, 2012

Celebrity Charities Struggle To Keep Admin Costs Low


These days, it seems every celebrity has a charity.

Whether it's born out of the goodness of their hearts, or a need for image rehabilitation, it seems there's not a star in Hollywood who can walk a red carpet without mentioning his or her own, personal charitable foundation.

It seems easy, right? People give money and it's then disbursed to those in need. But running a charity can be a lot more convoluted and confusing than a celebrity bargained for.

Last year, Kanye West shuttered the Kanye West Foundation after it was revealed that while he brought in over $570,000 in 2010, all of the money went to paying "administrative fees," and none of it was disbursed to the needy.

Wyclef Jean was humiliated when it was discovered that, instead of helping the people of Haiti, his fund Yele Haiti, had squandered millions. Rosie O'Donnell, Madonna, Oprah Winfrey and Michael Bolton have also been slammed in the past for their charities' performance.

Nonprofit watchdog group Charity Navigator suggests no more than 15 percent of a charity's cash flow should go toward administration or overhead. If a charity has 30 percent or more of its funds going toward administrative fees or overhead, they say a charity has trouble.

The Better Business Bureau's Wise Giving Alliance gives a slightly wider birth for administrative fees, recommending charities spend at least 65 percent of their total expenses on program activities.
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