A new survey has indicated that the public think charities spend less on the cause than they actually do.
A report published last week by nfpSynergy found that 56 per cent of the public would “give more to charity if they knew more about how their money is spent”, and that simply saying the money is going to charity will no longer “suffice”.
Joe Saxton, director of nfpSynergy, said that the survey responses painted a picture of a “pessimistic” public who believe charities spend far less on the cause than they actually do.
“Our analysis of the expenditure of the largest charities shows that typically around 86 per cent of total income is spent on beneficiaries, with around 14 per cent being spent on other costs," Saxton said.
Saxton pointed to data from a separate nfpSynergy survey conducted in April 2016, which showed that respondents estimated that the ‘average charity’ spends around 33 per cent of its total income on admin costs, 24.5 per cent on fundraising and just 42.6 per cent on the cause.
He said: "So the public believe that charities are spending as much as four times less on charitable causes than they do in reality”.
Charities must be more transparent
Saxton said this report showed that charities, in particular large fundraising organisations, must find a new means of being transparent with administrative and fundraising costs as the public “don’t see diligence when faced with a 60-odd page annual report”.
“If we look just at fundraising charities, fundraising and other costs combined are 37 per cent compared to the 58 per cent the public think is they spend in reality. So even the charities with the highest fundraising costs do better than the public fears. More transparency and openness is needed.
“It is for these reasons that we think that charity accounts need to have an executive summary or key facts section. Charities are doing themselves no service by hiding their information in pages of details. The public don’t see diligence faced with a 60 page annual report. They don’t read it.“
Saxton said nfpSynergy would publish a report in April which showed how “the public reacts to a real charity annual report”.
'Ideal charity' would spend 71 per cent on beneficiaries
Respondents to the recent survey said that their “ideal charity” would spend 57 per cent of its total income on its beneficiaries. nfpSynergy said that, as an example, Cancer Research UK spent 71 per cent of its total income on beneficiaries, “noticeably higher than what the public think is the right amount, indicating there is a lack of awareness among the public about what charities are actually spending on the cause”.
The survey also showed that the public’s ‘ideal charity’ would also spend on administration, fundraising and campaigning.
Survey respondents said that, after spending income on beneficiaries, their ideal charity would then spend 16 per cent of income on “campaigning for change”; 14 per cent on “fundraising costs” and the remaining 13 per cent of its income on “administration costs”.
Admin costs are ‘necessary, but the smallest part of where the public believes income should go’
The survey found that administration costs for charities “should be the lowest part of expenditure” across age and gender demographics in respondents. nfpSynergy said this presented an issue for charities moving forwards.
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“The issue for charities is that administration costs – whilst integral to running an effective charity – are not always fully connected with the benefit this brings to beneficiaries and the cause in the public’s eyes.
“The public are uncomfortable with the thought that their donation goes to paying staff. However, there is some recognition that administration costs do exist and are a necessary part of a charity’s expenditure, but should simply be the smallest component of this.”