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Lessons from Kanye’s foundation

By Kay Bell · Bankrate.com
Thursday, March 1, 2012
Posted: 1 pm ET

Excuse me, Kanye, I'm going to let you get back to your charitable work if you wish, but first I'd like to use your now-defunct foundation as a philanthropic cautionary tale.

Although the Kanye West Foundation closed its doors last year, the online news outlet The Daily recently examined the organization's previous tax filings. What it found could explain why the rapper is no longer in the giving game.

West's charitable fund apparently had plenty of money to spend. In 2010, the foundation reported expenditures of $572,383. Most of that went to the group's salaries and other overhead expenses.

In 2009, West's organization was a bit more frugal. That year its outlays, again primarily for operational expenses, were $553,826.

But despite all that money to keep the Kanye West Foundation running, the tax data show that the group's gifts to charitable causes were negligible.

In 2009, only $583 was passed along to charities. In 2010, not a red cent was donated.

That's right, nothing.

Uh, Kanye, may I interrupt for one more question? You do understand the underlying reason for creating a charitable foundation, right?

Yes, giving yourself a tax break is one motivator. But then a foundation needs to do its job, which ostensibly is to help out others. Or shut down. I guess West and his advisors opted for the closure route. Better luck with your next charitable effort.

Charity Navigator, a nonprofit watchdog group, says that at most 15 percent of a charity's cash flow should go toward administrative costs. The Better Business Bureau's Wise Giving Alliance recommends that at least 65 percent of a charity's total expenses go toward program activities.

While most of us who give to charities aren't going to investigate the groups' tax returns, we should demand that the nonprofits give us solid information on how they spend their money.

Reputable charities are happy to provide breakouts of expenses. And they proudly point to how much of the money they raise goes to their actual core mission projects.

The next time you plan to donate, go beyond just making sure that the charity is in good standing with the IRS. Get some details on just how it is -- or isn't -- doing its philanthropic job.

One group you might want to donate to today is the American Red Cross. Its members are in the field helping victims of this week's rash of deadly Midwestern tornadoes.

And while I know it's not why you'll donate, if you itemize you can claim your gift as a charitable deduction on your 2012 tax return.

Do you donate to charities? How thoroughly do you check out the groups' purported works?

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