I was depressed – or perhaps just bored – to read yet another round of articles and letters in The Age relating to charities and their cost/income ratios. This discussion comes up with tedious regularity; it was a particularly hot topic around the time of the 2004 Asian tsunami, and to a less extent, during last year’s Victorian bushfires.
Is it really worth giving to charity, does our money reach the beneficiaries or do charities squander it all on marketing, operational and administration costs? These are the kind of questions that are asked again and again.
Charities are like any other business. They need to generate money to conduct their core business and meet their objectives – in this case, to fulfil a community need. Charities exist to plug the gaps left by government and welfare systems, and they operate in a highly competitive market place. Not only do charities have to compete with all the other charities for the punter’s dollar (there are over 700,000 charitable organisations in Australia alone) but also with all the for-profit businesses relentlessly chasing our hard-earned dollars.
So it should come as no surprise that charities need to invest money in advertising and marketing across all types of media from Direct Marketing to social networks. They need to constantly update their skills and knowledge and explore new ways of building their donor (customer) base and income. The larger, better-resourced charities may choose to work with marketing and fundraising consultants to do this. And as with most business models, there may be a negative cash flow for the first one or two years until there is a return on the investment or marketing spend.
But before you vent your spleen about how charities misuse your donation, think about what it takes to actually run a charity. There is a common misconception that charities should be run without paid staff and instead by volunteers. Anyone, who like me, has worked on a professional basis for a charity, will tell you that it takes a lot more than enthusiastic volunteers and do-gooding retirees selling cakes and plants at fundraisers to build new aged-care centres, rehabilitate drug addicts, help the homeless, conserve eco-systems – let alone fund development programs overseas.
I have worked for a range of not-for-profits in the UK and Australia over the last 12 years, both as an employee and a freelancer. I have witnessed first-hand the tight cost controls and annual audits (no fancy Christmas parties), not to mention the strict monitoring and evaluation processes in place. But working in the not-for-profit sector is more than that.
It requires great dedication, vision and commitment from staff who are prepared to work for lesser pay but often, for longer hours. During the Boxing Day tsunami crisis, many staff working for overseas aid agencies interrupted their Christmas holidays and returned to work without hesitation.
A colleague, who works for one of the largest overseas development agencies in the world, told me recently what her CEO tells the charity-doubters. It concerns the lifecycle of a donor’s dollar. The gist goes something like this: you mail a dollar to the charity of your choice. When it gets there, someone has to open the envelope, record your details and perhaps generate a thank-you letter (otherwise you may feel aggrieved). Making sure your wishes are respected, this office worker must now earmark your donation for a particular project before putting it in a new envelope, addressing it, taking it to the post office and sending overseas.
Unless said charity has already established networks and best practice standards in the project area, the envelope containing your precious dollar may be intercepted and pocketed by an unscrupulous middleman. It may never reach the beneficiary. Well, you did say you wanted to make a direct donation?
Running a charity is a complex business and requires the same respect and support as any for-profit businesses. Charities rely on our support and donations to survive as do their beneficiaries. Listening to those who trot out the so-called scandals of uneven cost/income ratios make it all too easy for Jo Public to continue his me-me-me existence and avoid helping those in need.
Hi Charlotte
I also read the Sunday Age piece about charity ‘middlemen’. Having worked in, and with, not-for-profits running on the proverbial smell of an oily rag, I know they have to spend money to attract money. The question is, how much, and what proportion of the charity dollar is reasonable?
On a related note, I think some charities could claw back more of the donation dollar by streamlining some of their marketing/PR activities. One major charity sends me hard copy letters every couple of months; using up paper unnecessarily, and employing guilt-laden language to induce me to donate again. The harder they try, the less likely I am to do so!
Now, I consciously choose charities who don’t go down the guilt-trip route, but instead use their PR material to tell me about the work they’re doing in the field.
Good point Fiona. But charities continue to mail out letters because people respond and send in donations which fund core projects. Many of them are now using paper from sustainable sources and also trying to encourage donors to donate to on-line appeals. However, most people are still more likely to respond to a mailed letter than to an on-line appeal. It’s easy to delete an email…
As a writer of some of these appeal letters, I can honestly say they are not written to trigger feelings of guilt but for people to see what thier donation could achieve. I know there are some guilt-inducing ones around – luckily they don’t come my way.
I agree with you, however, that some charities are less efficient in thier use of resources than others and do really ramp up the heart-tugging messages. I guess the key is to find a charity that you respect and know and support it as best you can, both financially and as a volunteer/ambassador in the wider community.
“I guess the key is to find a charity that you respect and know and support it as best you can, both financially and as a volunteer/ambassador in the wider community.”
That’s absolutely right – you’ve summed up what I wanted to say, but didn’t quite manage!