I was just thinking about the attack on nonprofit overhead spending from a couple years ago. In case you don’t remember, some charities were under heavy scrutiny in the news media due to their lack of “direct funding” of programs. The cynics claimed that these charitable organizations were spending too much of their collected revenue on overhead expenses like executive pay, administration, and marketing. Obviously there is value in having effective leadership, marketing, and systems–for example, these expenditures create jobs, attract repeat donations, and build a community of activists. I thought it would be fun to compare DI loss ratios to this nonprofit dilemma. I looked at the loss ratio of our top DI carrier (which is published on the last page of every DI illustration) and looked at Charity Watch (a self-proclaimed financial watchdog for non-profits) and was astonished to see that our carrier and the Wounded Warrior Project, one of the most successful charitable campaigns of the past decade, were right in-line with each other. Our DI beneficiaries and the Wounded Warriors receive approximately $3 of every $5 collected. The remaining $2 goes to pay the admin/marketing costs (and reserves). I’d say that’s pretty good! I’ve always known our mission was to serve a higher purpose and this discovery was yet another reminder that we are doing the right thing and partnering with the right people to help people through a serious time of need. Who knew we were charity workers?
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