Should we worry about how much our favourite charities spend on administration?

Christmas might be a time of giving, but it is also a time of great need for charities helping those who need a hand. Many run special Christmas appeals to tap into the giving spirit. But it is the cost of such fundraising that has been questioned recently in a Fairfax Media study.

The analysis of 15 Australian charities shows that some are spending up to 41 cents in every dollar donated on the costs of administration and fundraising, while other charities spend as little as five cents of every dollar donated. The Fairfax report comments on calls for greater transparency in the charitable sector at the same time that that the Federal government is looking to abolish the body set up under Labor to regulate not-for-profit organisations. There is some concern that the abolition of the Charities and Not-for-profits Commission will result in increased uncertainty and fewer guidelines, making it harder for donors to understand just what does happen to their charity dollar.

Any organisation taking public money must be transparent and any reluctance to be clear about the cost of a charity’s operations should ring alarm bells. But shouldn’t we be just as focused on the outcomes of a charity’s works as we are on the cost to achieve them? The adage that sometimes you need to spend money to make money is as true in the charitable sector as it is in commercial business, yet many people have a strong aversion to money they donate being used for anything but an end project. Everyone wants to feel that their money is being used to help someone in need, but perhaps we need to expand our understanding of that idea. No organisation can run without staff - and paying for quality staff often means quality outcomes. Spending money on marketing can increase the visibility of an organisation and the issues it is seeking to address, leading to greater community understanding. There is often a multiplier impact as well: increased money spent on marketing can lead to more money being raised so those marketing funds can be considered an investment. And of course in most instances money spent on marketing and administration means increased employment, which can be a good in itself. 

In March, US fundraiser Dan Pallotta gave a widely viewed TED talk on this issue (posted below), arguing there is a real double standard in our relationship with charities. He argues that too many non profits are rewarded for how little they spend rather than for what they achieve. Pallotta suggests instead that we should start rewarding charities for big accomplishments even if that comes with big expenses.

A related issue is the actual number of charities that have tax deductible status and that are competing for the donation dollar. There are nearly 59,000 registered charities in Australia, with some 2300 registered in the past 12 months versus the 1200 registered in the previous 12 month period. Some of these charities are very small, started for a specific purpose, and in receipt of only a small amount of funds, but still needing to spend money on administration, regulation and fundraising. There is a question to be asked here as to whether the ends being sought by the people setting up these organisations could be better served by working with established charities instead to ensure more efficient outcomes.

While transparency and efficiency should be a key obligation of both, there will always be many differences between the charitable sector and for profit businesses. However when we are thinking about our favourite charity, perhaps the key question shouldn’t be what percentage of funds is being spent on administration, rather it should be what impact is being achieved with the money raised. After all, it isn’t just about the giving: it is about how what we give can change the world.

Should our politicians keep working over Christmas?

The silly season brings with it a range of regular stories: reflections on the year that was, best and worst TV shows, highlights of the year in politics (that must have been a struggle to write this year).  Inevitably, there is also the story about where our various pollies are heading on holidays. This latter story then leads to the inevitable criticisms and querying whether - with so many problems facing the world - perhaps they should just keep on working. Of course these stories are usually simply for sport, easy targets to make us feel better about the fact that most of us won’t be heading to France with our daughters for the holidays. But in the spirit of the season, can’t we afford to be a bit more generous? 

Regardless of our views of their effectiveness, it doesn’t take much to concede that being a politician is a hard, usually thankless and often lonely job of long hours, time away from families and many frustrations. And unless you are a true political junkie, aren’t we all relieved that there will be a couple of weeks at least where we get a break from the relentless display of the political arts in the media, of he said versus she said, of talking points masquerading as debate, of slogans pretending to be answers to questions? It is hard to imagine that we will really miss our favourite politician over the summer. 

And here perhaps is the opportunity; perhaps we could seize the day and spend the summer actually talking about issues in depth, not in soundbites. Perhaps while the politicians are away, we could open a conversation about what sort of society we really want to live in, unaffected by the political necessity for point scoring and disagreement with anything that has been suggested by the other side. Maybe we can do some of the work ourselves rather than rely on the pollies to do it for us. 

Let’s give the politicians a few weeks off and give them something to think about  when they return … including whether we even noticed that they were gone.