I have worked in fundraising for nearly 20 years now and the main dinner party question I get is “why do charities waste so much money on fundraising/ admin/ overheads?” (apparently all three are the same thing).*
Why does this question keep coming up? Is it because there are so many scandals of over-paid charity executives or extravagant excesses in the charity sector? Certainly, after the MP expenses scandal in 2009, I braced myself for a rude awakening of something similar in the charity sector, but I’m not aware of anything coming out, despite some journalists sniffing about.
Perhaps this antipathy towards core costs is partly our own fault—by ours I mean us fundraisers. In order to encourage mass participation, we have suggested that 75p a day is sufficient to sponsor a child in a developing country—so a fundraiser’s annual salary is worth a lifetime of support for an impoverished child. Clearly a specious argument entirely ignoring the multiplier effect that dedicated fundraisers create, but it seems to be present in some people’s minds.
Is it because of the Comic Relief promise? Comic Relief and Red Nose Day do fantastic work in galvanising an apathetic public and exploiting the peer effect for office-based and community fundraising, but the repeated public assurance that “all your donations go straight to charity” reinforces the idea that spending any money collecting, processing, protecting, checking, authorising etc is “wasteful” and should all be done for free.
Examination of Comic Relief’s accounts reveals the detail behind the claim: specific donations from corporate sponsors and investment income covers fundraising, staff and governance costs, so that all the public donations can be spent in grants. In 2010, Comic Relief’s non-grant making expenditure totalled around £20m and it made grants around £60m: about 25% spent on “overheads”. Is that too high a figure, or is it appropriate for an organisation that raised £75m in a few short weeks this year and has saved 10m lives from malaria?
The point is, we cannot and should not look at any of these costs without investigating the full picture: the impact that the organisation is having. Comic Relief’s work positively impacts on the lives of thousands of disadvantaged people throughout the world. We know this because they spend a lot of time informing us of their successes. We know that Comic Relief take the subjects of due diligence seriously and are able to inform donors both quantitatively (750,000 calls made to the National Domestic Violence Helpline in the UK since it was established in 2003 with Comic Relief funds) and qualitatively (the many, heart-rending personal stories we saw, heard and read).
This kind of monitoring may be seen as an extravagance that charities cannot afford, but the fundraiser in me knows that potential donors need to feel confident that the charities they wish to support will make a positive difference to the people with whom they work. This trust and confidence is what gives us that “warm glow” and why we return to support the work again and again.
So, in essence, if you think that a charity spends “too much” on overheads for you to donate – investigate your motives carefully. Is it because you don’t believe their results demonstrate tangible value for money, or because you are looking for an excuse not to give?
* If only I could ask for a donation of £78 and a signed gift aid declaration form (obviously £80 after 5th April 2011) each time I’m asked why a charity needs overheads, then I could give up this fundraising lark!