On Stuff yesterday it was reported that the New Zealand Breast Cancer Foundation last year spent 43% of its revenue on administration costs. In a similar vein, from the highly publicised Dancing with the Stars series, 40% of all the revenue gathered from text and the 0900 vote line was also spent on administration (source: Scoop).
While it is reasonable to have overheads for staff, office lease, telecommunications costs etc, where does the line get drawn for reasonable costs vs extravagance?
The Stuff article reminded me of a Voice-over-IP phone system we installed for a well-known charity around 2 years ago (we have since sold the VoIP part of our business to another party). For me, this was an eye opener on how different charities were in reality to how I envisaged them to be.
Charity A (as I'll refer to them) purchased a brand new four storey building in a reasonable area. Since it was old and in a state of disrepair, the decision was made to gut it, and refurbish it completely.
Here is where my issue begins.
The final product was amazing - the office had high quality carpet and fittings, air-conditioning in every room, a fully furnished kitchen with appliances for staff and visitors, and automatic opening glass doors between the different common areas. All of the internal glass was also etched with Charity A's logo.
The building and fit out was, in my eyes, suitable for a top NZ company, not for a charity that is supposed to be helping and investing as much of their dollars into the people that really need it. Charity A could have easily gotten away with much less, and better used the money saved.
Has this whole experience made me cynical? To a point. What it has highlighted is you need to be careful who you are donating to, and don't hesitate to ask how much of your donation is actually reaching the cause.
Charities should be looking to have trustees who have experience running successful businesses, they know how hard it is to get a business started, and should help rein in unnecessary spending. Every dollar should be spent as though it were their last.
Remember: a charity doesn't necessarily mean they are there to help the community, it just means they don't pay out profits to shareholders.