Are charity donors in danger of doing more harm than good?

I can understand this problem - I am a trustee of a charitable foundation that specifically makes small donations to small and mid sized charities that are unrestricted so that they might use it for their overhead costs.

We far prefer our money to be used to leverage bigger and more donations than have our relatively small donations actually spent in the front line. I believe that most foundations and charities are realistic about the need for overheads and would be happy to stipulate a percentage that can be spent on general overheads.

Asking donors is usually a good place to start. Possibly some education and guidance might be helpful.

This is a very interesting question, thanks for posting it and one which I shall post a link to from the charity community.  Talk Charity is also an open community which everyone one is welcome to contribute whether a subscriber to the ICAEW charity and voluntary sector group or not.

Thanks Caron - I'd ticked the Charity box when posting to Talk Accountancy and (apparently incorrectly) assumed it would automatically be posted to Talk Charity. I'll know for next time.

Mike

oh dear!  it should do, I suspect that is a technical blip which I shall shortly resolve with my colleagues!  thanks so much

kind regards

Caron

This weekend our church had a fund-raising event for ShelterBox, that is sending survival boxes to Haiti at the moment. When I looked at the ShelterBox web site they have priced their boxes at £490 per box (http://www.shelterbox.org/donate.php).. They don’t say specifically, but I suspect that the £490 includes an element of fundraising and admin costs. Because of volunteer labour they spend less than 10% on fundraising and central admin (rent, wages etc): http://www.shelterbox.org/donate_where.php.  In similar vein, my wife and I sponsor a child in the third world – Compassion quotes a cost per child, which would include admin costs. At work, instead of Christmas cards we make a donation to a charity that provides farm animals (pigs or chickens) to poor families in Africa – so much per chicken; so much per pig. Creating a "product" with an all-inclusive price might help to focus on the results and build in the essential admin costs automatically.

 

I suspect much of the solution will revolve around educating the donors. Sadly, in the particular case that gave rise to the issue the large donors are large corporate organisations that apparently don't want to be educated!

I have a number of charities that raise funds, often for a particular project and in the past we have had charities with restricted funds raised over the cost of the project.  In some cases they have gone back to the donor to ask them to lift the restriction and others where the funds are historic they have asked permission from the Charity Commission to lift the restriction.

In my experience you only get large amounts of restricted funds where the charity is specifically asking for the money for a particular project.

We have learned from these past problems and in a number of cases where charites are raising funds for a project or asset they now often inlcude small print that the money may be spend on other charitable activities other than the what they are raising funds for.  The charitable activities may include support costs i.e. employment costs, some administration costs but would not include governance costs i.e. audit costs, trustees expenses.

Obviously where a donor gives money for a specific cause this money should only be spent on whatever is specified.

We have learned from these past problems and in a number of cases where charites are raising funds for a project or asset they now often include small print that the money may be spend on other charitable activities other than the what they are raising funds for. I suspect much of the solution will revolve around educating the donors. The charitable activities may include support costs employment costs, some administration costs but would not include governance costs i.e. audit costs, trustees expenses.

Dear Mr Sturgess

The charities I am associated with all have the same problem. I think ensuring that a proportion, say 10%, of funds raised can be used to fund core costs is an excellrnt idea.

Sincerely

Allen Molesworth