Guide to donating to charities

How much of your donation is gobbled up by fundraising fees and expenses?
 
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01.The act of giving

Bucket of money

Nearly nine out of 10 adults give to charity, and the average annual donation is more than $400. The median donation is $100 – half of the donors give more than that. As well, 34% of us give up our time to support charities and other non-profits by volunteering.

But despite such widespread support and high trust in the charitable sector, donors have concerns. For example, a massive 81% of the 240 CHOICE subscribers who responded to our recent survey don’t know what proportion of their donation reaches their favoured charity’s beneficiaries, after fundraising costs and overheads. But 94% percent do think it’s important to have information about the proportion of those administration and fundraising costs.

Charities' expenses are just one issue of interest to donors, and probably not the most important. Charities don’t exist to make a profit, and measures of their performance should also consider whether they achieved their stated mission and objectives.

97% of respondents to our survey think it’s 'very' or 'somewhat' important that they’re provided with information about the effectiveness of charities’ work. Ultimately, people want to know that their contribution is making a real difference — and has the best impact it can.

The problem is getting and comparing the information. Our research — including a survey of charities — found wide variability and inconsistency in the way they communicate key information to donors. That’s if they communicate it at all. Sometimes, the information simply isn’t publicly available.

While overseas aid organisations have a voluntary code of conduct to improve disclosure to donors and beneficiaries, some charities don’t make their annual reports or financial accounts available to the public. And there is no uniform accounting or reporting standard for charities.

This absence of transparency means that the 90% of us who want to donate have an almost impossible task in comparing charities and ensuring our money has the best effect.

A call for better regulation

Several of the charities we surveyed would like a single regulator for the sector, to replace the mish-mash of regulations and reporting requirements they have to comply with in different states and territories. The UK has a Charities Commission; Canada and New Zealand also have uniform regulation.

The Fundraising Institute Australia supports the establishment of a single regulator. "This initiative would greatly reduce compliance and administrative costs and should enhance regulation and consistency making aspects of fundraising such as fundraising costs clearer and comparable," it says.

CHOICE would also support such moves, particularly if they meant improved transparency and disclosure for consumers.

Please note: this information was current as of April 2008 but is still a useful guide to today's market.


 
 

 

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