On Thu, Apr 4, 2013 at 3:28 AM, ashok _ <[email protected]> wrote: > On Tue, Apr 2, 2013 at 9:03 PM, Deepak Shenoy <[email protected]>wrote: > >> 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... >> > > Isnt acquisition cost a skewed metric to be evaluating charities on ? > > lets say you bought a brand of Soap after watching some adverts about it - > you don't think about the advertising cost that inflated the cost of the > Soap when you buy it. Also the impact of every person who did not donate > raises the acquisition cost which then impacts the person who donated - > i.e. they think the cost of acquisition is too high. (i.e. the cost of the > Soap is higher because of all those people who didnt buy the Soap after > watching the advert, so they had to publish more adverts ) .
This is not so in the case of a charity. Let's divide the distribution of money into three categories: a) Investments b) Consumption (expenditure) c) Charity In b) (where soaps are) I don't care about the end use of my money. I care about the product I get - this is a barter, so I don't expect the manufacturer to tell me to use the soap in a certain way, and I don't get to tell him where he should use his money. In a) I care about the cost of making hte investment. The more that's taken by a "middleman" (say 2% entry load into a mutual fund or commissions when I buy a property) the less the money that goes into whatever I've invested in. A 2% entry and exit load or commission means what I invest has to grow 4% just for me to break even. Beyond that, I can't dictate too much. The acquisition cost usually figures in entry or exit loads, or annual management fees, so I will try to minimize those (unless the intermediary can substantially raise investment values) In c) I care about the end use of my money, because the only reason I'm donating to charity is for it to make me feel good. All altruism is about making one feel good about doing good to someone else. If I get the whiff that half my money is going to pay for acquisition, then I'm thinking: forget it, I'll find an orphanage or old age home and donate direct. Yes, there are other causes that need attention. But the 50% "load" just puts me off. I think I'll only be happy with 10% and other overheads of another 10%. > I think an equation which takes into account - total raised monies, cost of > raising monies, total %age of annual turnover that goes towards the actual > purpose of the charity may be better ? yes, of course. But as I've said, I might excuse overhead as payment for good quality people. They are part of the cause. For instance you can't achieve proper child education without sanitation, food and stable homes. So if a child education charity were to say they'll give some money to parents for rent/sundry expenses, or build a common toilet, I don't have a problem even if it isn't the main cause. So paying a plumber is ok. Paying people industry level salaries is ok. These might actually appear as overheads in many cases, and therefore I wish to make a distinction between the actual purpose % and the "cost of acquisition". However these other factors are also important. If industry level salaries means that 80% of the money raises is overheads, then I think we have a problem back again. I'm not going to feel good paying someone industry level salaries to deploy 1/4th their salary on a good cause. And the feel good factor is important.
