It is better to give when not being deceived

Six-time Tour de France winner Lance Armstrong has already shown he can dominate the world of cycling. Now the cancer survivor is setting his sights on the world of charitable giving.

His breakaway move was marketing a $1 yellow elastic wristband with LIVESTRONG imprinted on it. He has sold 23 million of the bands over the last six months and is still selling more than 100,000 a day. The wristbands have raised about $22 million for his cancer research and education foundation, almost double what the charity raised in the previous four years.

The wristbands, the same color as the leader's jersey in the Tour de France, show Armstrong has an uncanny ability to make charitable giving a hip fashion statement. But is the money he is raising being used wisely? Is it going for worthwhile causes? As the holiday season approaches, these are the types of questions consumers are asking as they are deluged with requests for money from charitable groups.

Getting answers is a lot easier than it used to be, thanks to the availability of charity tax filings online, but it still involves some work. Charity watchdogs can be a good resource, but their analysis is not always accurate and some of them tend to review only the biggest, national nonprofits. Those consumers who really want to know if their money is being put to good use need to do some digging on their own.

"It can get very complex," said Jamie Katz, chief of the attorney general's public charities division. "You need to look at more than one set of financial documents to understand where money for services is really going."

One benchmark for every charity is how much money it is raising and how much of that money is actually going to the causes the charity supports.

In its most recent Internal Revenue Service filing, which doesn't include the wristband contributions, the Lance Armstrong Foundation of Austin, Texas, reported raising nearly $8.8 million and spending $10.5 million. Of the $10.5 million in expenditures, nearly 81 percent went for program services, including research grants for the Dana-Farber Cancer Institute and Massachusetts General Hospital.

By contrast, the Firefighters Charitable Foundation of Westerly, R.I., raised more money overall but spent relatively little of it on the charity's stated purpose, helping volunteer fire departments and victims of fires and disasters.

Of the $10.7 million the Firefighters foundation raised and spent last year, 86 percent, or $9.2 million, went to professional telemarketers who solicited funds in 45 states. Only 12 percent of of the money raised, or $1.3 million, went for program services. Administrative costs were minimal.

Don Silver, a spokesman for the charity, said the organization is trying to funnel more money to programming, but fund-raising and telemarketers are very expensive. "That's the industry," he said. He said the foundation stopped soliciting in Massachusetts earlier this year, but he didn't know why.

Although every charity watchdog group gave failing marks to the Firefighters foundation for its low program expenditures, there is no rule of thumb on what level of spending is appropriate for every charity.

The Better Business Bureau, which rates charities at Give.org, recommends that at least 65 percent of total expenses go for programs and no more than 35 percent for fund-raising. The American Institute of Philanthropy, which rates charities at Charitywatch.org, says nonprofits should devote at least 60 percent of their expenditures for programming.

Charity Navigator and Guidestar, charity watchdogs created by businessmen frustrated with the lack of reliable information available to donors, use more customized yardsticks because they believe fund-raising and administrative expenses can vary dramatically from one nonprofit sector to the next.

Suzanne Coffman, a Guidestar spokeswoman, said the median program expenditure for food banks in its massive database is 94 percent, but it's 68 percent for art museums and just under 60 percent for charities that sponsor arthritis research.

Fund-raising efficiency can also vary dramatically. The median cost of raising a dollar for all charities surveyed by Charity Navigator is 10 cents, but the median is just 2 cents for food banks and 24 cents for public broadcasting stations.

The charity watchdogs all have different philosophies. Give.org and Charitywatch.org rate a limited number of national charities. Give.org only tells where a charity deviates from its "standards for charity accountability," while Charitywatch hands out letter grades and boasts that it digs deep, ferreting out whether a charity is lumping the cost of fund-raising letters in with its program expenditures.

"It's not what they say they are spending, but what they are actually spending," said Daniel Borochoff, president of the American Institute of Philanthropy, which produces Charitywatch. "It's far too easy for a group to fudge the numbers to look good."

The 10-year-old Guidestar.org provides free access to the IRS Form 990s charities are required to file, but it charges $150 a month or $79 a day to gain access to its reports on individual charities. The reports offer detailed information on a charity's finances and how it compares to nonprofits with similar profiles, but they are probably not worth the expense for the occasional donor.

Charity Navigator, founded in 2001, is the newcomer to the group and the most aggressive. At Charitynavigator.org, it evaluates more than 3,000 charities, including many local ones, strictly on a financial basis. It gives them zero to four stars based on how efficiently they raise and spend money and their long-term financial health.

Morgan Memorial Goodwill Industries here in Boston received two stars from Charity Navigator, even though 86.5 percent of its expenditures went for program services and only 4 percent for fund-raising. What brought Morgan Memorial's rating down was slumping revenue growth, primarily due to cuts in government grants.

"Revenue isn't always the best way to measure a nonprofit," said Joanne Hilferty, the president and chief executive of Morgan Memorial, noting that the charity managed to expand its programs despite the revenue cutbacks.

Even watchdogs make mistakes. On its website, Charity Navigator is decrying the Wang Center for the Performing Arts for paying chief executive Josiah Spaulding Jr. $524,917 while spending less than 60 percent of the money it raises on programs.

Charity Navigator ranks Spaulding number one on its top-10 list of highly paid chief executives at low-rated charities, noting his salary accounts for nearly 10 percent of the Wang's overall expenses.

Yet Charity Navigator failed to take into account that the Wang oversees and raises money for three related charities. The three charities are incorporated and file tax forms separately for liability reasons, but operate as arms of the Wang Center.

On a consolidated basis, the four Wang-related charities don't look like underperformers. They devoted 74 percent of their expenditures to programming and Spaulding's salary, while still very high (only 2 percent of charities surveyed by Charity Navigator paid more), represented just under 4 percent of the Wang's total expenditures.

Bruce Mohl can be reached at mohl@globe.com.