Opinion: Hot issue - Should charities shout about how low they keep fundraising costs?

The Institute of Fundraising has branded as "unhelpful and irresponsible" charities that boast about spending nothing on fundraising, claiming they undermine others trying to be open about the need to incur such costs.

NO - Alan Gosschalk, director of fundraising, Shelter

This is a tricky area, as it's conceivable that charities might gain a competitive advantage from publicising low fundraising costs. But at a time when many in the sector are calling for more transparency about fundraising methods and operating costs, trying to compete over who is the cheapest is a move in the wrong direction.

If you bear in mind that costs sometimes appear lower than they actually are because support from certain funders has been earmarked to cover them, a single bottom line can be misleading. Besides, we know that fundraising costs are a necessity, but it is up to us to explain to the public why we spend this money.

Of course, there are instances when fundraising costs are genuinely low because a charity has harnessed volunteer or pro-bono support, and one can see the temptation on these occasions to publicise low costs. But there is a risk in implying that volunteers are good and paid staff bad.

Although keeping costs down is something we all strive for, we need to focus the debate primarily on the benefits our work brings, but also on why we need to spend money to raise money. I believe in doing what's best for the sector in the long term - not for individual charities in the short term. To that end, openness is vital.

NO - Amanda Delew, former director, Giving Campaign

Fundraising costs money - even low-level volunteer-led fundraising usually has a cost involved. I am involved in fundraising for my children's school fair, and we are investing money up front in the hope we will reap even greater rewards. For Brookfield Primary School, that means buying a DVD for the raffle and placing an advert in the local paper. But for charities angling for bigger bucks, it means a much more significant investment.

Why should charities pretend otherwise? As long as every pound is valued by fundraisers and their managers, investment will usually result in benefits.

A database that works, decent research tools, effective training and an administrator to enable fundraising staff to focus on their core business are all sensible investments.

In fact, nothing annoys me more than a charity that underachieves because its trustees refuse to invest in fundraising. Their parsimony is often damaging and should not be seen as good management. Charities need to start explaining that fundraising has a cost and help donors understand the value of planning their giving. If more donors gave tax-effectively and generously, then fundraising costs would plummet as income rocketed.

YES - Andrew Nebel, marketing and communications director, Barnardo's

Charities must more actively promote and educate the public about the true costs of fundraising. For too long, they have been reticent about the realities of the fundraising 'business' for fear that this might alienate public opinion. And not without cause, since charities in general have long perpetuated the myth that fundraising is free. Charities use lines such as "every penny of your donation goes to xyz", and it's not unknown for some to conceal costs by creating 'contra-deals' in which donations are offset against expenditure to keep them off the profit and loss account.

In today's climate, this kind of thinking is old hat and, ultimately, indefensible. GuideStar, standard information returns and an inquisitive media are all looking closely at charities' fundraising expenditure. A continued reluctance to adopt an open approach to the true cost of fundraising looks defensive, as if the sector has something to hide. Clearly, it doesn't - few businesses operate as cost-effectively as charity fundraisers.

It might be a painful revelation to start, but there is no alternative than to begin educating the public about fundraising costs and allow them to judge which charities are demonstrating responsible stewardship of their donation - and which are not.

NO - David Brann, fundraising and communications director, RNLI

Charities should boast about how much good they do. People who have had their lives, or those of their loved ones, saved or transformed by a charity would probably agree that fundraising efficiency is an important but secondary issue.

Fundraising cost ratios are a complicated measure to explain and understand - it is all too easy to sound defensive. There is a high risk of 'headline reporting' being misunderstood, which could cause serious damage to charities' reputations and, therefore, their ability to fundraise in the future.

Fundraising costs more for less universally popular causes - established charity brands that enjoy higher awareness often find it both easier and cheaper. Furthermore, the cost of fundraising depends on the fundraising mix, over which charities have little control. It is expensive to recruit supporters with high lifetime value, but this will be more cost-effective in the long run.

Charities should manage their affairs as efficiently as possible and communicate this, as it increases trust and helps gain new supporters and retain existing ones. The difficulty is when one charity's costs are compared with another - one would rarely be comparing like with like.

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