A Closer Look At Charities
BERMAN: So each year in the United States, Americans donate almost $300 billion to over 1 million non-profit organizations, but where is that money going and is it being used effectively? A new book takes a close look at the world of charitable organizations, it's called "With Charity For All: Why Charities Are Failing And A Better Way To Give." This book exposes fraud and flaws in a system with little accountability and the book says the charitable sector has simply lost its way. Ken Stern joins us now. He is the former head of NPR. NPR is a non- profit organization. How did your experiences there factor into this book?</s>KEN STERN, AUTHOR, "WITH CHARITY FOR ALL: WHY CHARITIES ARE FAILING AND A BETTER WAY TO GIVE": Well, my experiences on NPR sort of got me on the trail of trying to understand the charitable sector more broadly. NPR I think is a great organization, but even when I was there one of the challenges I found it was very hard to talk to the organization about accountability, measuring itself and trying to find out whether it accomplished its mission. The organization like many charities are framed by their own narrative and I would go to the board meeting and ask people for their visions of success and they'd give me 15 visions, different definitions of success and come back the next day and there would be 15 more.</s>BERMAN: You write about a lack of accountability in the charitable sector. You say it starts right from the beginning a study out of Stanford University who says the IRS has approved more than 99.5 percent of all charitable applications. This statistic reveals the first troubling truth about our process for deciding what is a charity and what is not, we don't have one. We permit almost anyone with a basic facility with government forms to start a charity. From the very beginning you say the system is flawed.</s>STERN: Actually I understated, it's actually 99.8 percent. Anyone with a facility with government forms can start a charity. When you look at the charitable sector a lot of charities are really for-profit organizations for all intents and purpose. The charitable hospital system probably the best example, more profitable than for-profit hospitals, they pay their executives into the millions of dollars in compensation and the research shows there are no more charitable than for-profit hospitals and a lot less charitable than government hospitals.</s>BERMAN: You're critical of well-known charities, the Red Cross and DARE, which fights drug abuse among kids. What are your complaints or what are the flaws you see in these well-known groups?</s>STERN: Well, they're very different. I would say overall the biggest challenge is in addition to the uncharitable charity is the vast majority of charities don't do research, they don't benchmark themselves, don't make themselves accountable to the public for effective service. DARE is actually a great example, 20 years of research showing it's ineffective and some cases harmful to some of the kids who go through the program. It's not only ineffective. It stays in business, but also blocks more innovative and successful programs from getting into the schools.</s>BERMAN: So the question is what can we do if you're someone who wants to give to charity we should all give to charity, how do you find the right one if there are problems in the Red Cross and DARE? How do you find who to give money to?</s>STERN: So the problem doesn't actually start with the IRS, it starts with donors. Americans are the most generous donors in the world, the average family rich or poor gives about $2,700 a year, but Americans actually don't focus on the most effective charities. Americans don't put work into finding charities that are innovative and effective. They give to famous brands. They give to the charities of the friends. They give to charities easy to give. They give out of habit. This conversation will last longer than the average American puts into research in charities each year, takes work to find the great charities.</s>BERMAN: All right, Ken Stern, the book is "With Charity For All." It is bound to start a lot of conversations and maybe start some controversy as well. It's nice to see you this morning.</s>STERN: Thank you for having me on.</s>O'BRIEN: Ahead this morning on STARTING POINT, a day until Pope Benedict officially steps down. We'll tell you what he's told his tens of thousands of faithful at the Vatican this morning. We take you live to Rome for that. And then homes crushed and highways closed, a deadly winter storm is on the move right now and unfortunately lots more suffering ahead for the millions of people still in its path. We'll take a look at the forecast. We're back in just a moment.