Advent Conspiracy Video

This video circulates every December, but I still enjoy watching it. It’s put out by a Christian organization, but I think viewers of any faith can appreciate the message. Enjoy!

Donor-Advised Funds

An important tax planning and charitable giving tool is the Donor-Advised Fund (DAF). There are hundreds of DAFs offered by non-profits, community and corporate foundations, and so on. Since DAFs are sponsored by 501(c)(3) non-profit organizations, donations:

  • are irrevocable
  • may be tax-deductible

However, DAFs are “donor-advised,” which means that donors may continue to direct:

  • investment decisions
  • grant recommendations

Tax Benefits
Donors receive an income tax deduction when assets are donated into the DAF, but may continue to “advise” the DAF on investments and grants. Effectively, this means that donors can still direct how the assets are invested and granted.

Timing Benefits
The assets can remain in the DAF indefinitely before being granted out to the final 501(c)(3) non-profit. Thus, a donor can donate assets this year, but does not need to decide on the final non-profit recipient this year. The donor can decide where to direct the grant next year or in 10 years or beyond.

Other Benefits

  • Many DAFs can accept complex assets (such as real estate or business interests) that smaller non-profits are unable to handle.
  • If anonymity is desired, grants can simply be reported under the DAF and not from the original donor.
  • Once donated, assets can be sold without incurring capital gains tax and/or any future growth is tax-free.

A Flexible Solution
Investment considerations and tax planning often determine how and when to maximize the tax value of donations. However, these factors may not align with the charities that one supports. For instance, what if a charity is unable to accept stock options? Or perhaps a charity could use more recurring monthly donations rather than yet-another-lump-sum donation in December? A DAF is a great vehicle that can solve for these and other challenges.

Review: Operation Christmas Child

Operation Christmas Child is a program that has millions of participants, nearly 80,000 volunteers, and a sizable number of vociferous critics. It is a program that I hear about every single November from friends, colleagues & acquaintances, church contacts, and so on.

Many smart, well-intentioned people that I know choose to participate in OCC each year, mention it in conversation, or invite me to participate and many other smart, well-intentioned people that I know have nothing good to say about OCC and criticize it each year. I actually did participate once many years ago, but now decline for a variety of reasons. Of¬†course, I do not have the self-control to simply let the topic pass when it comes up (like I should). So rather than launching into a monologue about my questions and concerns, I’ll just send them a link to this post which they can either read or disregard ūüôā . Hopefully this post can also be a resource for those caught between OCC’s promoters/apologists and it’s critics, both of whom overstate their positions IMO.

Every organization and project has some “hair” on it (including the ones that I support and donate to!), so the below should not be construed as a demonization of any organization or activity and I don’t want to discourage anyone from doing good. We each do our best to weigh the pros and cons and unknowns through the lens of our judgement, priorities, and values.¬†The below is simply my personal research, thoughts, questions, and rationale. Keyword being: personal. There’s¬†more than enough room for multiple priorities and values and, of course, I could be wrong (just ask my wife ūüôā )

What is Operation Christmas Child?
Operation Christmas Child (OCC) is an annual campaign that rallies millions of people to fill shoeboxes with gifts which are then distributed to kids around the world through a network of churches. It is sponsored and administered by a faith-based non-profit called Samaritan’s Purse (SP).

A Funny Thing Happened On The Way to Criticizing OCC…
One of the reasons that I stopped participating in OCC is because I think it is a terrible way to provide relief and aid. OCC promoters and participants have tried to pitch me on the idea that the shoeboxes provide for physical needs. Relief and development professionals, as well as critics (including myself), point out that the boxes do not provide for needs, can harm local economies, and that the distribution costs are a waste of resources. OCC’s online apologists have countered that the boxes likely provide some benefits, despite the costs.

The funny thing is that OCC never claims that the boxes meet needs or are beneficial in any way. OCC’s website is quite clear that the purpose is evangelism and that the boxes are tools to that end. So why do OCC promoters, participants, and apologists communicate the idea that the boxes are providing for needs? I am not sure. Perhaps they are reading too much into the oft-repeated OCC refrain that boxes are delivered to “needy children” or are making other erroneous assumptions. I was totally against OCC because it seemed like a misguided way to deliver aid, but learned that OCC does not even claim to provide aid.

Despite the above, many of OCC’s supporters believe that the boxes are meeting needs. To those people, I would say read through the OCC website and¬†consider the below questions:

Is OCC an efficient and/or cost-effective way to distribute goods?
The cost of purchasing items in the US, collecting and processing them, and then shipping them overseas is much more expensive than simply buying and distributing goods locally. Imagine buying a pair of socks that was made in China, shipped to a US retailer, purchased at American prices, and then shipped back to India. It would be cheaper and more efficient to simply buy socks in bulk from an Indian company, which would be both lower cost and supportive of the local economy. I am not saying we need to boil everything down to dollars and cents and efficiencies, but stewardship of resources should be a consideration.

Do the contents of the shoe boxes meet actual needs?
OCC-suggested items include:¬†“a ‘wow’ item (such as a toy or clothes), personal care items, school supplies, clothing and accessories, crafts & accessories, toys, and personal notes.”

OCC critics point out that it is either naive or arrogant to think we can give a gift to someone without knowing anything about them. OCC apologists contend that many of the suggested contents are basic necessities, such as toothbrushes or school supplies. I can see both sides, but would point out:

A. Needs are often contextual. For instance, OCC suggests socks as a possible gift. I’ve been to a ton of places where kids do not typically wear socks. This is not to mention other OCC-suggested items such as scarves, mittens, things that require batteries, or articles of clothing. It is difficult to understand wants/needs with no context and OCC does not let donors know their box’s destination ahead of time.

B. Giving a useful item is not always providing for a need. What I mean by this is that toothbrushes might be a necessity, but are also not difficult or cost-prohibitive to procure (especially relative to effort and cost of buying one in the US and shipping it to Africa).

A Personal Story: Closet Full of Sweaters
Back in 2008, my wife and I volunteered at a couple of orphanages in Cambodia (today, I’d have reservations about doing something similar again). One day, a staff member led me to a closet to grab some office supplies. When he opened the closet doors, I saw both school supplies and shelves and shelves stacked with winter sweaters. The sweaters looked new and I could not imagine them ever being worn in tropical Phnom Penh (especially thick, holiday-themed ones).¬†I asked the guy, “What the heck are all these sweaters?!”

Laughingly, he replied, “Americans keep sending us sweaters every year.”

I asked, “Why don’t you tell them to stop sending sweaters?”

“We don’t want to make them feel bad.”

It is very difficult to provide aid or give gifts when you know nothing about a person or their context. I am sure some boxes meet some needs, many boxes fulfill wants, and others bring joy. With 12M boxes delivered, I don’t think that is debatable. However, it seems that many more needs and wants could be met and more joy delivered if the program was run differently.¬†OCC’s promotional videos highlight success stories. This is what marketing, sales, and fundraising is all about. It is not deceptive in any way, but any¬†action or program will result in a range of outcomes. OCC sends 12 million boxes, so there should be an ample number of success stories. The question is not whether there are some successes, but what does the distribution of outcomes look like and what are the costs? What is the mean and median outcome? What do the tails look like? How does the skew look? And, of course, how does OCC’s distribution compare to those of its peers and other similar organizations?

Do the boxes disrupt local economies?
In other words, does the importing of free goods undercut local businesses and economies?¬†Donors do not know where their boxes will end up, so it is difficult to say whether boxes will negatively impact their respective destination. I’m sure some boxes have a neutral economic impact, while others will have a more negative economic impact. Personally, a range of outcomes that is neutral to negative sounds pretty bad to me.

The OCC apologists make a valid claim that we do not know the economic impact of each box and that the quantities may be too little to do much harm. Yet, OCC advertises that they will deliver 12 million shoeboxes in 2017. In light of these figures, I believe it is hard to argue that the aggregate economic impact is unknown or marginal. Questions #1 and #2 above are about whether the program provides benefits and/or whether those benefits can be achieved more efficiently. This Question #3 is entirely different in that the answer may be that OCC has a negative impact. Other methods of relief/development has costs and negative externalities as well, so just pointing out that these factors should be taken into account and weighed against any potential benefits.

The Objective Part
If your goal is to provide for needs and/or deliver aid/relief, then OCC is not the program for you. Firstly, because they do not aim or claim to do these this. Secondly, even if they did, it is not an efficient way to do it.

If your goal is to support the evangelism activities of Samaritan’s Purse (SP), then OCC may be for you. The next question is whether participating in OCC or simply donating money is a better way to support SP.

The Subjective Part
As mentioned, I do not personally support OCC or SP for that matter. This post is focused on OCC, but I also have questions and concerns about SP. To be brief:

  • If SP sponsors and runs OCC, what do their other projects and operations look like?
  • Is OCC indicative of a larger problem of viewing evangelism through a Western-centric lens of consumerism and providing “stuff?” Conversations with other Christians in the non-profit sector lead me to believe the answer is yes. I’d dig deeper if I was interested in supporting SP, but am not.
  • SP is led by Franklin Graham. I have a lot of respect for Franklin’s parents, the late Ruth Graham and the famous Billy Graham (who was buddies with my grandparents). However, Franklin has a history of questionable financial moves and is overtly (and overly IMO) political.
    • In 2009, Graham was publicly questioned about his combined salary of $1.2M¬†and then immediately decreased his salary¬†to nearly¬†nothing. He has since raised it back up, albeit less publicly. There is nothing illegal about this, but why was he taking a salary so high that it was reduced when publicly disclosed? And why reduced to zero and raised back up? Why not simply adjusted to a reasonable level? And why all of this in the midst of revenue declines and layoffs at his organization?
    • According to public filings, Graham’s 2015 compensation from SP was over $500k. Not a huge amount for the president of a large non-profit (especially for someone with a recognizable name that can bring in donor dollars), but quite high for: an organization of its size and especially for a Christian/religious organization. Of course, perhaps SP would not do as well with another leader. Again, nothing illegal here, but it raises eyebrows and elicits questions of board independence and stewardship.
    • In addition to his SP salary, Graham receives an additional $250k for his work with the Billy Graham Evangelistic Association (BGEA).
    • BGEA recently changed its IRS status from a “non-profit” to an “association of churches.” SP has also requested to be reclassified. Coincidentally, “association of churches” do not need to report financial or compensation data. Its a curious move to seek a change to your IRS status after compensation/stewardship controversies, especially after operating as a non-profit for decades.
    • I can deal with someone being far-left or far-right, but good ol’ Franklin was proponent of the Obama “birther” conspiracy theory (among others), has said ridiculous and hateful things about Muslims and immigrants, and these days is implicitly¬†defending child molester and US Senate candidate Roy Moore. Hearing Christian leaders take political positions is bad enough, but some of his extra-political comments just make me sick.
    • Perhaps SP is insulated from Graham’s personal views and financial issues, but he is the president of the organization. He has influence. I’m sure he has some positive qualities too, but there are enough questionable things that I don’t personally feel comfortable supporting OCC or SP.

Final Words
All of the above is simply my personal view, based on speaking with OCC participants, browsing the OCC website, and speaking with other development professionals. Not deep due diligence, but enough to get a feel for the organization. Of course, there’s multiple sides to every issue and I’m open to learning more, being proven wrong, or simply continuing the conversation as we all find our way. Merry Christmas!