Public believes 40% of charity income goes on admin costs

People hugely overestimate how much charities spend on fundraising and administration, according to research published this week by nfpSynergy.

Joe Saxton
Joe Saxton

A survey of 1,000 people by the not-for-profit think tank found that people believe charities spend 40 per cent of their income on administration. The actual figure is estimated at 12 per cent by donor information website Intelligent Giving.

They also think charities spend 35 per cent of their income on fundraising. The real figure is estimated at between 12 and 25 per cent.

The real figures are close to the percentages respondents deemed acceptable - 11 per cent in the case of administration and 23 per cent in the case of fundraising.

Both perceived spending figures are the highest since nfpSynergy began quizzing the public on its attitude to costs three years ago. They have led to renewed calls for greater transparency.

Joe Saxton, co-founder of nfpSynergy, described the results as disappointing.

He said organisations should be less worried about revealing their costs because the survey showed that what people thought acceptable was quite close to the reality.

"Charities need to do a better job of explaining what they do," he said. "They could put information on their websites and do mailings saying why they spend what they spend."

He pointed out that 41 per cent agreed or strongly agreed with the statement that "it makes sense for charities to spend more of my donations on fundraising this year if it will increase their income for future years", compared with 34 per cent last year.

Saxton also suggested that charities should rename 'administration costs' as 'necessary management costs' because administration was a vague term that implied wastefulness.

Richard Marsh, director of the ImpACT Coalition, which promotes charity transparency, said charities were becoming more transparent, but there was still a long way to go. They needed to demonstrate how they were tightening their belts in the slowdown, he said.

Marsh said Saxton's idea to rename administration costs was interesting: "But there is a danger that, if you create a new term, the public will think you are trying to do something nefarious."

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