Charity Choice and adminstrative costs

There’s a recent trend to check a charity’s administrative costs to determine if one will give to them or not.

While exorbitant overhead costs or executive salaries can be outrageous, don’t judge all non-profits by the same story you heard of some executive who had a mansion and a 7-figure salary. Most non-profit administrators and staff are working like all get out to keep their programs going with very little finances to keep them going.

In fact, according to Saundra Schimmelpfennig at the blog Goodintents.org, low administrative costs can be misleading on the effectiveness of an organization.

Some projects have inherently low administration costs such as construction projects – because of the high cost of building materials in relation to administration costs – and donated goods. This can lead to schools built or libraries stocked with books but both go unused because there is no money to hire teachers.

This giving mindset can lead to problems for non-profits that want to do things right but have trouble getting funding for the very things they are best at.

In a non-profit that I’ve worked with in Guatemala, they struggle to pay salaries, maintenance and basic expenses because many givers have designated there funds to specific projects that cost the organization a lot but are not the core programs.

Schimmelpfennig continues with a word of caution:

Be wary of any program claiming extremely low administration Administration is a necessary part of aid projects. Organizations claiming that all of your money will go directly to the aid recipients either have a secondary source of funding, are expecting volunteers to cover administration costs out of their own pocket, or are not being honest with donors. When I spoke with staff in my state’s Consumer Protection Agency they said that one of the red flags that will trigger an investigation of a charitable organization is if it claims no fundraising expenses.

So when you look to give to an organization, see what they are doing and how well they’re doing it. If you like what they do, support them in doing it! That includes giving to general fund expenses. Your gift that pays to keep a light on may be the dollar that illuminates the new ministry, outreach, or  research branch that changes hundreds of lives. It may even be the dollar that lights the lab where they will find the cure for cancer!

Read more of Schimmelpfennig’s useful article at  Don’t Choose a Charity Based on Administration Costs

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