Ian MacQuillin: It's not possible for all of your donation to be spent directly on the cause

Running a charity costs money, and so does fundraising, no matter what outsider-disruptors might claim

 Ian MacQuillin
Ian MacQuillin

If you give £10 charity, you want every single penny to be spent directly on the cause. You want your 10 quid spent on mosquito nets or digging wells or training guide dogs.

You don’t want you hard-earned to go on the electricity bill, the receptionist’s salary or tea bags for the fundraising office. However essential all these things might be to the operation of an efficient and effective charity, you don’t want to pay for them. It’s OK if someone else does, but not you.

This is what people want when they give to charity.

Sadly, they can’t have it.

There are costs to running a charity, and there are costs to running it well. They’re not small. Because charities are funded in the main by donations, those “overhead” costs will be met out of donated income. Where else will they come from? It’s an obvious enough truism.

A second truism is that people rarely give to charity unless they are asked to do so, and asking costs money. And an investment in fundraising now will reap even more income for charities in the future.

The fundraising profession has a devil of a job trying to engage with and convince the donating public of these two truisms.

That endeavour is not helped when it is periodically undermined by people and organisations that, on the face of it, speak from within the sector or profession.

The latest example of this is Virgin Money Giving piling into the criticism of JustGiving for taking fees from Colonel Tom’s fundraising for the NHS. But it’s far from the only case.

One similarity that many of the critics of overhead and fundraising costs have is that, although they appear to be sector representatives, they often come from outside the established sector and like to see themselves as “disruptors” who are shaking up the old guard.

One of the things they want to disrupt is the cost of fundraising. Which is great if you have a new product that is genuinely going to lower the cost of fundraising across the board while at the same time raising more money (or at least the same amount of money) to help beneficiaries.

But many of the disruptors seem to be driven by a moral or ethical concern about how much fundraising ought to cost. Over and above bringing a cheaper (but not necessarily better) “product” to market, these disruptors see themselves as the moral guardians of how charities ought to operate.

They take their values in this regard from the public’s desire that all the donations are spent on the cause (“good”) rather than on fundraising and other admin costs (“bad”). Whether they are charities, providers or regulators, these outsider-disruptors all want to “protect” the donors’ values and their giving experience.

We’ve seen this pattern with the many ratings agencies that make no bones about the fact they exist to look out for the interests of donors and the public, and which usually set restrictions on how much of a donation can be spent on fundraising costs.

Now, there is nothing at all wrong with coming in from outside and shaking things up. But a little less arrogance that you know best and a bit more understanding of and empathy for the sector you want to support wouldn’t go amiss.

For one thing, the charity sector is characterised by a lot less competition than in the commercial sector. Of course there is competition, but it’s not the same, and we don’t take kindly to corporate sector-style competitive practices.

Second, and more importantly, there is a fundamental misunderstanding about who needs their “protection”. These disruptors take a consumer-protection model and slap it over the charity sector. In this model, donors are “consumers” who need protecting from “unscrupulous” charity practices, such as spending some of their donations on fundraising costs.

But the people who need most protection are charity beneficiaries, and it’s charities that give them this protection. If the outsider-disruptors were to approach the issue from the perspective of protecting the beneficiary, they would see that banging the drum about what the public wants (but unfortunately can’t have) is naive at best and dangerous are worst, because it could lead to a lot less money being raised by charities to help the people who rely on them.

So to all the outsider-disruptors who decide they want to come into this sector and tell us how we ought to run it, at least have the humility to understand our values and why we do things the way we do.

And if you don’t at least try to understand how and why this sector operates the way it does, we will reject your self-appointed moral guardianship.

Ian MacQuillin is director of the think tank Rogare

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