This is a situation I had to deal with the agency I work with. A well known foundation contributed $100,000 to a project we were starting (we also contributed $100,000), but none of the funds could go to administration. This foundation gets to tout in their publications and press releases that all of the money goes to the cause and none of it goes to administration. But how does the project actually get accomplished? We as an agency have to provide the administrative costs or find someone who will. $100,000 can’t be set on a desk and magically perform miracles to help the cause.

So it makes it look like our administrative costs are higher than the foundation – but we each contributed $100,000. If we show a 10% administration cost, the reality is that we paid 5% and the foundation paid 5% - it just doesn’t look that way.

When I was looking to contribute to a charity on my own I ran into the same thing. There was an agency that provided similar services to the one I was interested in and showed lower administrative and non-cause costs. But after looking closer, it became apparent that the difference came in advertising. But it was the first charity, the one with higher advertising and therefore non-cause costs that actually got me motivated toward that particular cost. In a way, the lower administrative overhead cost charity was piggybacking on the other. Without the one charity spending more on getting the information out, how would the other be doing? I opted to go with the charity that got me involved.

Another point. The cost of administration is going to depend a lot on how mature the cause is. In the example I gave earlier with our agency, our administrative costs had to be higher because it was a start up. Over time the admin costs will come down as the structure is set up and the program operates for a while (or should come down).

And last, when an anonymous donor is picking up the operational costs, that is money the donor could also be giving to the cause, in this case an operation. So it may feel like every dollar you contribute toward a $30,000 surgery is going toward the child, but in a way it is going toward administration since you could just as well pick up 10% of the admin cost and let the anonymous donor’s contribution also go toward the surgery. It is a pot of money; were my particular dollar goes is irrelevant if the overall need is served in a cost effective manner. And you still don’t necessarily know if the admin costs are high or low for this organization – maybe that donor is spending way too much on admin and could be contributing more toward surgery.

This is not meant to attack this particular charity, but jut to encourage us to think about these catch phrases we hear – such as “I don’t want to pay for some administrator.” But somebody has to perform necessary actions for jobs to get done. And those administrators also need to feed their families.

Thanks

Nice site and i wish you the best raising money. Couldn’t think of a better cause.