Giving is a part of the Christmas tradition for many of us, and this includes making charitable donations where we can. However, how charities handle our donations can sometimes be the cause of confusion and controversy
The amount spent on administration costs is one such area, and for big organisations, these expenses can run into the millions of dollars. For example, World Vision spent a whopping $37.7 million on fundraising last year, and that money is generated by taking a percentage of your donation. Often, only 60-70 cents in each dollar donated goes directly to the cause (there are exceptions, of course)
Charities use the other 30 cents or so for things like advertising, staff or marketing to grow the organisation. All these efforts require administration costs that are often essential to running an organisation to its full potential. In the same year, World Vision delivered an unparalleled $271.6 million dollars to its causes, which could not have happened without effective administration
That does not mean that charities do not require scrutiny, and the government agrees. In the last 12 months, the Australian Charities and Not-For-Profits Commission (ACNC) was created to help regulate the industry. In many ways, this will be beneficial to charities by removing red tape and standardising accounting practices. Average consumers will be able to assess organisations more easily.
You can apply your own scrutiny when donating, and you will quickly find that some ways giving back to the community can be more beneficial to a cause than others. Make your charity count using the following tips:
- Check out a charity for yourself – organisations should be transparent about their finances, and if it’s not readily available on their website, look at the annual report. You can then decide for yourself if you are happy with the way a charity is being run.
- Donate directly – a monetary donation directly to a charity is more valuable than buying products or merchandise with an inherent cost (like Christmas cards). Although, if you’re happy with a product (and were going to buy it anyway), there’s nothing wrong with supporting charities this way too.
- Donate in other ways – Past reports have shown that a lot of CHOICE members like to volunteer, which is a great non-financial way to contribute. You could also consider donating an item, like a toy under the Kmart Wishing Tree.
Above all, choose a charity you are passionate and give it your support. In the festive season, the gift of giving can be the best reward of all.
Not all donations are delivered equally, so we show you ways to make your donation count. What charities do you recommend and why?