Donors overestimate fundraising and admin spend

Professional Fundraising, 22 October 2008

Reality and perception about charity spending on administration and fundraising are worlds apart, according to a new study into public understanding of the sector.

A new study by nfpSynergy found that the public overestimates how much money charities spend on both fundraising and administration by a significant degree, and also thinks they spend more on the activities than they should.

The survey of more than 1,000 adults in Britain found that while the public believed 23 per cent to be an acceptable amount of income for charities to spend on fundraising, they believed the actual figure to stand at 35 per cent. In fact, the actual average amount spent by charities on fundraising, according to Intelligent Giving, is in the range of 12 – 25 per cent.

Admin spend tolerated less

Administration costs, however, were less well tolerated and more poorly understood. While the public estimated admin costs to account for 40 per cent of income, the true figure stood at 12 per cent on average, very close to the average 11 per cent deemed to be an acceptable amount by the respondents to the survey.

“This should prompt charities to better explain the true level of, and the rationale for, all of their costs,” said Joe Saxton, driver of ideas at nfpSynergy (pictured).

“Greater relative public acceptance for fundraising, plus an increased willingness to invest in fundraising to boost future incomes, suggests this educational task vis-à-vis costs may be slightly easier in relation to fundraising than admin.

“All the more urgent, then, for admin to be positioned as ‘necessary management’ – no wasteful burden, but rather an essential lubricant without which the very wheels of charity would not turn.”

Issue for whole sector

Adam Rothwell, Intelligent Giving, agreed this was an important issue that every charity needs to address.

He said: "It’s been shown over and over again in lots of different pieces of research that the question of overheads, fundraising costs, admin expenses are consistently the things that worry donors the most and consistently as well donors overestimate how much gets spent on these things.

"What charities should do is, rather than try to reduce these costs in every way possible, they should do as much as they can to explain why they are necessary. Some charities do a great job of that, others don’t.

"I think it’s really a long slog for the sector as a whole to try to increase awareness of why these costs are necessary and at the same time that they are lower than people think."

Public support for campaigning

There is also greater public support for charities to campaign on important issues, even when they may offend sections of the community, according to the study. In the year from July 2007 to July 2008, the percentage of people supporting such activity rose from 67 per cent to 74 per cent.

Likewise, the proportion of the population that support charities concentrating on lobbying government to change laws and policies related to their work increased to 65 per cent in 2008, up from 56 per cent last year.