Oh, it depends. There is a tipping point beyond which a charity does need
to focus on grassroots work rather than on management and logistics.
And before that tipping point is reached, just ramping up staff, processes
etc to the level where they need sophisticated management and marketing in
place in order to maintain their current activities, let alone expand, will
cost them significantly and possibly even distract from the activity they
are meant to be performing .. service.
Ingrid Srinath [10/04/13 10:09 +0530]:
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%.
Deepak,
Here are a couple of devil's advocate scenarios:
Charity J: Spends virtually nothing on donor acquisition, brand building,
policy advocacy, professional staff, technology or monitoring and evaluation.
Deploys virtually the entirety of the small sums they collect to feed starving
children. Saves their lives but does nothing to expand the number of lives they
can save or to prevent more children from being reduced to starvation.
Charity Q: Spends about 50% of their revenues on expanding their donor base,
auditing programmes to improve effectiveness/efficiency, building knowledge on
causes of and remedies to poverty. Consequently, reaches greater numbers of
children with greater effectiveness each year, changes policies that cause
poverty or prevent its reduction, develops programme innovations that are
widely replicated by other charities and governments.
Which would you choose to support? Would it be the latter subject to say, a 30%
cap on 'overheads'?
By the way, one simple way to help a charity lower its fundraising costs is to
pledge long-term support.
Ingrid
