A homeless veteran named Johnny Bobbitt roamed the streets of Philadelphia one day until he happened upon a young woman named Kate McClure. Kate’s car had run out of gas and she didn’t have any money or credit cards with her. Though the homeless man only had a few dollars, he reached into his pocket and gave them to Kate.

The story of Johnny Bobbitt’s generosity went viral and he garnered a groundswell of support. Kate and her boyfriend, Mark D’Amico, took it upon themselves to create a GoFundMe account for Johnny. They promised to buy Johnny a house with the money they raised. In a relatively short period of time, the account ballooned to over $400,000.

According to an attorney representing Mr. Bobbitt, he only received $75,000 of the money raised. Bobbitt used $50,000 to buy an SUV and camper, and the other $25,000 to feed his drug habit. It didn’t take long for him to lose the camper and SUV.

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Kate and Mark began living a lifestyle that belied their modest means. They went on lavish vacations and purchased a new BMW and other luxury items.

It turns out that the whole thing was a scam. The three had known each other for at least a month prior to the supposed event taking place. There was no empty tank, no gas money, nothing about the story was true. Mark was sentenced to 5 years in prison, Kate got 4, and Johnny was let off with probation.

Better Wise Up

Organizations like Charity Watch rate charities and provide potential donors with much-needed information to make informed decisions. Charity Watch assigns a letter grade to each charity and breakdowns the various components of their analysis.

One such metric is what Charity Watch calls Program %. It's the percent of donations that actually goes to what the charity purports to do. The higher the Program %, the better. For example, a charity with a Program % equal to 80% gave 80% of donations to charitable programs and spent the other 20% on fundraising, management, and other overhead expenses.

Another Charity Watch metric is Cost to Raise $100, which as the name implies, is how much it cost the charity to acquire $100 in donations. The lower the Cost to Raise $100, the better. For example, a charity with a Cost to Raise $100 of $20 spent $20 on fundraising for every $100 in charitable donations received.

Parting Thoughts

Even some of the biggest charitable organizations have had scandals, like United Way and the Wounded Warrior Project. When it comes to giving money to charity, it pays to do some research and choose wisely.

Photo credit: Pixabay Eggstack News will never post an article influenced by an outside company or advertiser. Our mission is to help you overcome uncertainty about retirement planning and inspire confidence in your financial future. This article is for informational purposes only and is not financial advice or any other type of advice. Eggstack makes no representation to the validity, accuracy, completeness, or suitability of purpose of any information presented in this article.