Oxfam will have a month's running costs paid for by PayPal in an effort to alleviate donor qualms about how much of their donations go to overhead costs.

The online payment service has pledged to ensure that 100 per cent of all donations made via PayPal on the Oxfam website in February will go to the charity’s work on the ground, not to ‘running costs’ such as training or logistics. Normally around 81p in the pound donated this way goes to the charity’s core work, but PayPal has agreed to top up donations to cover the running costs in an effort to incentivise more donations.

The announcement comes as Oxfam-commissioned research reveals that two-thirds of donors have been put off by perceived waste on overheads from making a donation to charity. The charity’s research also found that donors over-estimate the amount spent on running costs by as much as threefold.

In unveiling the initiative, Oxfam fundraising director Cathy Ferrier was cautious not to condemn charities spending on administration.

“Our running costs are absolutely essential to allow us to deliver hundreds of programmes,” she said. “However, we appreciate that these costs can be a barrier for some people who are otherwise completely behind what Oxfam does.

“At a time when belts are being tightened, it’s vital that charities are accountable. While we are delighted with PayPal’s offer to pay for our costs, we also want to assure people that we keen them to an absolute minimum and are committed to making every penny count.”

PayPal’s offer will apply to all donations made on the site during February, and will also cover the proportion of a regular donation signed up to in February for a period of 12 months.