Following Your Dollar : Philanthropy watchdogs track effectiveness of nonprofits and help the public make informed donations.

The No. 1 reason why most people give to a charitable organization?

It’s not because they know the first thing about the charity. It’s not because they know their donation will actually be used to bankroll medical research, or feed starving children, or lend disaster support. It’s not even because they want the tax deduction.

The No. 1 reason: because they are asked.

Which suggests the Catch-22 of charitable donations: “That means the most active fund-raisers are getting the most money,� says Daniel Borochoff, “not necessarily the organizations doing the best work.�

As president of American Institute of Philanthropy, a Bethesda, Md.-based charity watchdog organization, Borochoff knows which charities do the best work with the money they raise--and which ones don’t. In 1992, he founded the institute to track the effectiveness of nonprofits and help the public make informed choices in supporting the best charities. Since then, the institute has rated hundreds of groups on specific “performance measurements� based on their financial disclosures.

“If you are giving the dollars, we encourage you to follow the dollars,� says Borochoff, who mentions a survey earlier this year that found 67% of charitable donors never ask how their donations will be spent.

And that’s the bottom line for Borochoff when grading nonprofit groups in the organization’s quarterly “Charity Rating Guide and Watchdog Report.� Spending at least 60% of total expenses on the charitable program (as opposed to fund-raising and administrative costs) is considered “reasonable� in the rating system; so is spending $35 or less to raise $100 in donations. The organization rates on an A to F scale.

Groups that meet those benchmarks score better than those that don’t. In a recent rating guide, for example, these Los Angeles-area charities earned top marks: Elizabeth Glaser Pediatric AIDS Foundation (A-plus), AIDS Research Alliance (A), Salvation Army-Western Territory (A) and Starlight Foundation (A).

Other organizations earned F grades for spending too low a percentage of the money they take in on program services or spending too much money to raise money. Among them were Riverside County-based Help Hospitalized Veterans, the Cancer Federation in Banning and the United Children’s Fund, with administrative headquarters in Santa Ana.

Shriners Hospitals, with an affiliate facility in Los Angeles, received a unique report card: an A-plus based on the high percentage of money spent on programs and the low amount spent on fund-raising, but an F based on what Borochoff calls its “eye-popping reserves�--about $7.6 billion.

Borochoff warned that potential donors should beware of fly-by-night charities allegedly soliciting funds to help earthquake victims in Turkey. He mentioned postings on the Internet and on bulletin boards for a bank in Turkey to which donors may send money. “It really would be foolish to send money to some bank account in Istanbul.�

Among groups raising money for Turkish victims is Oklahoma City-based Feed the Children, which gets an F for spending 70% of its budget on fund-raising and only 14% on programs.

“You’re throwing your money away if you’re giving to an inefficient charity,� Borochoff says.

The top-rated charities among those offering aid to the earthquake victims include American Red Cross, American Jewish World Service, Catholic Relief Services and Doctors Without Borders.

Other factors can give a charity a low grade, says Borochoff, who generally doesn’t like out-of-the-blue telemarketer charity calls or groups that mail stamps, address labels or greeting cards as solicitations because they tend to be cost-inefficient. (On average, only one-third of the money brought in by telemarketing goes to the charity cause and the groups that send out address labels and greeting cards spend too much to bring in $1 and $2 donations.) And, he adds, “Most people who give money think in terms of the charity using it in the next two years, so if a group holds the money for three or more years, that can be reason to give it an F rating.�

While consumers might find this kind of scrutiny helpful, some nonprofits don’t open their books to the organization’s investigators.

“If a group doesn’t want to be accountable to us, we will go to public sources and print our findings anyway,� Borochoff says.

“And the numbers we find may be very different than what the charities themselves report . . . because there are all kinds of tricks and manipulations that go on� when nonprofits report their financial data.

Not that consumers can’t try to decode it themselves: A new law took effect in June allowing anyone to see a nonprofit’s annual reports by requesting it in writing. But the reports aren’t likely to be mistaken for beach reading material, says Borochoff, who directs hands-on philanthropists to the institute’s Web site (https://www.charitywatch.org), which provides listings of the top-rated nonprofits, the ratings guide and information on how to give most effectively. “People don’t necessarily have the patience for it, so we do it for them.� For those not on the Web, the report can be obtained by sending $3 to the institute at 4905 Del Ray Ave., Suite 300, Bethesda, MD 20814.

Another watchdog group, the New York-based National Charities Information Bureau, cautions, “Know your charity.� Its suggestions: Ask for written information giving the exact name of the charity (many sound alike), its purpose, on what programs it spends funds and how much of your dollar is used for true charitable purposes.

Beware, says the information bureau, of high-pressure telephone and mail solicitations, of calls or letters telling you that you have won a valuable prize from a charity and of any charity that insists on sending someone to pick up your contribution rather than having you mail it.

Further, the organization cautions, give a check, not cash; don’t give your credit card number to strangers, and ignore dunning letters and those that say you have pledged money unless you are certain you did.