Have you ever wondered where your money goes after making a donation? In this series of blogs, GPP co-founder Simon Moss explores how you can understand where it goes, why, and how you can help it go further.
Poised eagerly on a street corner near you, waiting to pounce as you walk past, the charity stalker has become a common sight on our cities’ streets. Clipboard in hand, dressed in a bright logo emblazoned t-shirt, they try to sign you up for a monthly giving program for their cause.
It’s a tactic I’ve fallen for – six years ago in Bendigo, a regional town in Victoria, Australia. With a few minutes to kill before visiting my Aunty, I stopped to ask a few questions. Fifteen minutes later, I’d handed over my bank details and have ever after seen twenty dollars exit my account each month.
Increasingly though, these collectors aren’t staff or volunteers from the charity you’re giving to, they’re paid fundraisers from a third party. As Daniel Flitton noted in The Age last weekend, it’s a matter of efficiency for charities and NGOs, who can raise more for less by outsourcing.
I’ve sought out some thoughts on this practice, and people have raised two objections, which I’ll take a moment now to consider:
I’m giving to a charity, I don’t want money going to a business.
That’s fair enough – but it costs money to fundraise. A proportion of your money will either go to the fundraising business, or it will go in staffing, administration and others costs at the charity you’re supporting. In engaging these companies, many charities have made the decision that it will be less cost and hassle to outsource than to do it themselves, freeing them up to focus on the work that we all want them to be doing.
These businesses take too much of a cut.
This one’s a bit trickier. The fundraising companies often charge a commission – as much as 95% of the first years’ donations according to the recent piece in the Age – which is agreed to by the charity. This seems like a huge amount, and it seems bizarre that charities would accept it.
Well, it really comes down to the maths. Monthly giving programs are the holy grail of fundraising for charities, as they provide a predictable and long-term source of income. If people last more than three months, they’re likely to last years, much like my six years as a donor from that day in Bendigo. So, it may be a huge amount in the first year, but the charities have worked out that it’s worth it as a long term investment.
For example, at $20 a month, I give $240 a year. Say a fundraising organization took a $200 fee from signing me up. That means that charity got just $40 in the first year, or 83% of my money was eaten by ‘fundraising’ expenses. That’s disgraceful. But, as a loyal donor of six years, the charity haven’t spent any more on fundraising from me (although they have spent some money on administration to send me brochures, receipts and the like). Over six years, I’ve given $1,440, meaning that the $200 fee is now just 14% of the total donation that I’ve made.
As someone who just wants to make a positive difference, this can seem like a minefield. So, I’ll leave you with one simple piece of advice. Next time you’re talking to one of these people, ask them if they’re paid, a volunteer, and if they work for a fundraising company. If their answer is good, keep talking. If you don’t like their answer, but still want to give to the charity, take the promotional materials and make a donation online when you get home. Charities will raise money wherever it’s most effective and efficient, so your use your donation to tell them how you’d like it done.