Guide to donating to charities

How much of your donation is gobbled up by fundraising fees and expenses?
 
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06.Donating effectively

How much of your donation gets through to the cause depends not only on the charity you’re dealing with, but the channel you use and the type of appeal. Charities have to spend money to raise money, but the costs differ depending on the method they use (and charities often use several different ways to raise funds).

  • "If you want to make a difference, don't wait to be asked and don't wait for the charity to spend money on fundraising. Give and give as generously as you can," says the Fundraising Institute Australia.
  • Givewell agrees that to have the best effect you should make a direct donation, rather than buying raffle tickets, merchandise or helping to sell confectionery, for example. The costs for a charity to put on a ball or dinner, to buy a car for a raffle, or to use a commercial fundraiser for sales calls and street collecting, are much higher than processing direct payments over the internet or via mail, or counting the money that’s been dropped into a collection box in a shop or restaurant.

Charity dinners and balls

After the cost of speakers, entertainment, the venue and catering, less than half of the price of a ticket might be left to go to the cause being supported.

For example, using figures from annual reports, we calculate that the 'profit' from Ronald McDonald’s House Charities (RMHC) balls ranged from 43% to 54% over the last three years (its other types of fundraising cost around 3%). RMHC clearly discloses on tickets what the cost of the ball is (it’s not tax-deductible), and that additional donations go in full to charity.

Other charity balls are less profitable. Another charity’s national fundraising manager, who had previous experience in running charity balls, said a return of 5 to 10%, after costs, was typical. "For that reason, charities are less likely to use balls and events to raise funds, because of the high costs and the need to be accountable to the people spending money (the donors)."

And in 2005, it was discovered that just 8% of the proceeds from a dinner that the Children’s Cancer Institute of Australia for Medical Research (CCIA) organised was made available to cancer research. The event, which Cherie Blair spoke at, failed to generate sufficient public support. CCIA had said in its licence application that 60% of funds raised would be dispersed.

Commercial fundraisers and consultants

For-profit companies are often used by charities — for example, on-street collections and call centre operations. While commissions based on a percentage of donations are banned by the Fundraising Institute Australia’s Principles and Standards of Fundraising Practice (and some charities don’t use telemarketing as they don’t approve of it), that doesn’t apply to every charity.

Some charities we surveyed, including Mission Australia and Oxfam, use commercial fundraising companies that keep a high proportion of consumers' donations over the first year. Charities argue this can be cost-effective. If the new donor continues to make monthly contributions for, say, five years, the cost averages about 25 to 30% of what’s donated.

World Vision also uses commercial fundraisers, but this represents a small proportion of its new child sponsorship income – only 5%.

Volunteering

34% of the adult population volunteer to various non-profit organisations, including charities. They give, on average, 56 hours per year.

If you’re interested in volunteering, charites often have details online, or try Volunteering Australia (03 9820 4100). Its website Go volunteer lets you search for opportunities in your interest area and postcode.

Many CHOICE readers told us about volunteer work they do and how valuable they feel it is.

  • "I give volunteering time (I drive a corporate blood donor bus) one day a week. It makes me feel that I'm directly contributing to the charity, in however small a way."
  • "Volunteerism is a vital part of our social fabric. Without people donating time and money to charitable causes the public purse would be put under intolerable pressure."
 

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