On Friday, the Obama administration announced the charities that would receive the $1.4 million that president Obama was awarded when he won the Nobel Peace Prize. Interestingly, CNBC, the leading financial news channel looked to cover the news and brought on Chronicle of Philanthropy staff writer Ian Wilhelm to talk about the picks.
What transpired was interesting because CNBC thought they had a “gotcha moment” when they pointed out the overhead expense ratios of some of the organizations were not perfect according to Charity Navigator. They even singled out College Summit, one of the most well regarded education charities, to ask about its seemingly low percent of revenue going to fund programs.
To Ian’s credit, he quickly pointed out that many people, even Charity Navigator, do not believe overhead expense ratios are the best way to evaluate nonprofits and do not capture how effective they are.
The video clip is interesting because it demonstrates how woefully ignorant the financial news media is about philanthropy. Considering philanthropy is a $300 billion a year industry and nonprofits book $1.5 trillion in revenue each year, the financial news media is dropping the ball on a major segment of the economy.
(Full disclosure: I’m on the advisory board to Charity Navigator helping them launch a new rating methodology.)