How inefficient is it to give to telephone or door-to-door fundraisers?

[fivemack]

Someone phoned me 'from {name inaudible} on behalf of Christian Aid' this evening, and informed me that there were many orphans in Zambia as a result of the HIV epidemic, that the cost of sending one of them to school was £86 a year, and that it might be nice to give Christian Aid seven pounds a month to this aim.

My naive assumption is that the right answer is 'yes, that would be nice, I'll send Christian Aid a cheque for n*£86, n depending on how rich I'm feeling, at Christmas', on the grounds that a telephone fundraiser might well take a cut of any donations to cover their running costs; does anyone know how much of my seven pounds a month would actually get to Christian Aid?

(I have a fiver-a-month standing order on behalf of a charity working for blind people, which I made as a result of a door-to-door fund-raiser, and I fear there's a rather larger cut being taken out of that; I should probably kill the standing order and make one directly to the charity)

Comments

[ex-robhu.livejournal.com]

I don't know what the cut of the phone operators is (if any), but Christian Aid's income / outgoings page is here (http://www.christianaid.org.uk/aboutus/incomeandexpenditure/spend/index.aspx). It contains these two this pie charts for a year's spending:

[fivemack.livejournal.com]

Thanks, those are very interesting figures: both that the proportion spent on fundraising is so enormous, and that the total charitable spending of what I thought was quite a large charity is so small.

I wonder whether the right answer is something slightly non-obvious. Charitable giving is a matter of 'how much' and 'to whom'; 'to whom' is clearly a horribly difficult question, there's no reason to expect that I should be better than a professional at figuring out which causes are good than that I should be better than a professional at deciding which shares to buy, and I know the latter is not the case.

So this is an capital-allocation problem. Capital-allocation problems tend to have large economies of scale; it may require more administrative effort to distribute €100 million among the FTSE100 as it does €10 million, but not ten times more, and likewise it doesn't take ten times as much administrative effort to write one extra nought on the end of the cheque that's going to the people actually doing the good works. So I ought to take my charitable giving as a single lump sum and give it to the largest available trustworthy organisation.

When I think of capital allocation, I think of Warren Buffet.

So, aside from the trivial detail that they don't appear to accept donations, why isn't the Bill and Melinda Gates foundation the right answer?

[1ngi.livejournal.com]

C.A. work on similar principals to Oxfam - where I worked in fundraising for 3.5 years. Basically telephone, door to door and direct mail are the most economical methods of mass fundraising where essentially for every pound you spend, you can raise 9. The least economical is the charity shop model where Oxfam spend 50 million running their shop network to bring in an income of 75 million - however this is a much better profit margin than any other UK high street shop because they are mostly staffed by volunteers.

This doesn't mean that charity shops are a bad way of raising funds because having such a good high st visibility totally supports that charities brand and credibility and certainly (but hard to measure) supports other fundraising activities. If a charity is big enough then having a sound financial business model such as Oxfam or Christian Aid that spreads fundraising across a range of activities then you should expect them to spend roughly 17% of their income on generating future income. The charities commission start questioning if it goes over 25% and so should everyone.

Bill and Melinda Gates foundation gave Oxfam £10 million in 2006 specifically to support AIDS work - it was felt at the time as significant endorsement of the work Oxfam did and I know that the foundation continue support Oxfam.

Hope that helps.

[(Anonymous)]

interesting to see that Christian Aid spends more in real terms and as a percentage of income on grants to the developing world than any other UK NGO