On 2 Apr 2013, at 23:33, Deepak Shenoy <[email protected]> wrote:
> Ingrid, > > What parts of the DTC are the worst for the NGO sector? Would like to > hear also of some alternatives, or at least to address whatever has > caused the IT department to believe that a change from current rules > was necessary? > The provision that makes all surpluses not disbursed in the year they are collected taxable is a key issue. Only incomes raised in the last month of the fiscal year and a further 15% of net incomes are exempt provided the NGO submits a schedule to disburse these. This ensures that NGOs cannot accept multi-year grants, build reserves or plan for the medium or long term. The proposal to withdraw 35AC (100% deduction) will have some impact on revenues. Possibly most dangerous is the narrowing of the definition of charitable purpose to service delivery making advocacy, research etc. taxable. The stated intent is to prevent for-profit organisations using NGO status to evade taxes. More here: http://xa.yimg.com/kq/groups/20416062/188164697/name/Appeal+For+Action+(English).pdf >> OTOH, the reductionist overhead:revenue ratio as a metric of 'deservingness' >> is, I believe, as much a consequence of the sector's failure to provide >> plausible alternatives, and its willingness to play the ratio game, as it is >> of the need for a one-size-fits-all comparator. > > I agree, and in India at least, there is very little effort at > transparency. When I wrote about Oxfam's heavily skewed ratio, Oxfam > management did get in touch, and the one thing they mentioned was that > "at least we reveal these numbers". It's horrendously difficult to get > appropriate comparisions. When I complained (and continue to complain) > of acquisition costs - not overhead, but just the costs of acquiring > donations - of around 50%, I am told this is the industry average. If > it is, it is obvious why people don't donate... > > That ratio is essentially a consequence of the composition of revenue and the > channels used e.g. Large donations from a few institutional donors would > typically result in a low ratio whereas an organisation dependent on raising > many small sums from a larger number of donors would have a higher ratio.Of > course that choice also affects the organisations level of freedom and > stability as larger sums almost inevitably carry conditions and are subject > to abrupt changes. Online donations, for example, cost less to raise than > those obtained via direct mail, telemarketing or face-to-face methods. The American Institute of Philanthropy's upper bound on fundraising costs is 35%. My concern is the absence of norms rather than a particular ratio.
