As we all know, most charities spend a proportion of their income on generating further income. Also, we are aware that charities cannot spend 100% of their income on fundraising, otherwise they would not be spending any money on their charitable purpose. So there must be a level at which fundraising expenses are acceptable.
However, there are hidden fundraising ‘costs’ that are not on the accounts sheet. For example Christian Aid displays the following figures on their site:
Out of every pound we receive, we spend:
* 52p on long-term development projects
* 17p on responding to emergencies
* 12p on campaigning and education
* 18p on fundraising
* 1p on administration
The unseen item is how much resource do external fundraisers contribute. We can see that Christian Aid spend 18p in the pound on fundraising, but in addition to that we have the time and money that external fundraisers (the people who do sponsored bungee jumps, etc) commit to fundraising for Christian Aid. This time and money only adds to the 18p in the pound fundraising figure above – the money raised is already accounted for in the above figures. So even though these people are acting on behalf of Christian Aid, their expenses (and time) are conveniently off the accounting sheet.
To better appreciate the amount of resource that a charity (including it’s supporters) is actually spending on fundraising you need to estimate the time and money that is off the record.
From the figures available for Christian Aid (for example) it is very difficult to assess this cost as their income stream does not differentiate between income from external fundraisers and income from fundraising where the costs are directly to the Charity itself (e.g. the cost of letters asking for money).
For the estimate it is worth including both the time and money of the external fundraisers (this is what is accounted for if the fundraiser is an employee of the charity, after all). If we monetise the time spent by fundraisers then at a guess I would estimate that the final figures must fall into the range of 20p to 35p in the pound compared to the 18p in the pound published figure.
Please don’t assume that I’m questioning the published figure – I’m not. I’m just trying to add to that figure the fundraising costs that are external to the official Christian Aid organisation as incurred by it’s external fundraisers.
So, if we could actually have a reliable estimate of the true costs of fundraising by charities what would our response be? Charities that spend a large proportion of income on fundraising are criticised for that and they usually attempt to reduce that proportion.
There are probably some charities that have no ‘off account’ expenses for fundraising, but probably also other charities that have no ‘accounted for’ fundraising costs because it’s members freely give of their own time and resources to fundraising (i.e. it is all ‘off account’). Just because they can claim zero pence in the pound fundraising costs does not mean that they (in the larger sense than just the accounted for organisation) has zero fundraising costs – it always costs money to receive money even if it is just to check your bank statement and to write it into the accounts. The time and money of voluntary fundraisers should be taken into account by donors, in just the same way donors are interested in the official figures.
So bear in mind that a charity with a zero fundraising cost may, in this slightly different way of looking at things, actually have a 50% or higher fundraising cost.
Here the Charity Commission states that it will take up complaints where people identify that “fund-raising or administration costs that are excessive”.
