Charity overhead costs seem to be at the centre of controversy, with many stories in the media depicting charities as deceiving and untruthful, by spending people’s donations on administration costs₁, instead of the charity’s cause. However, it is time that this perspective on overheads is diminished and society realise why charity overheads are great!
1. Charity Overheads are necessary…
Companies have overhead costs, but no-one is causing a fuss about those. Charities need them too. Without spending money on administration such as wages, recruitment, building space etc. charities would not be able to do their job, and donor’s money would be less well spent!₂ Charities need to educate the public on how they work and operate, and how without overheads, their charity would seize to exist. By engaging in discussion around what their overheads are, and how much they spend on them, we can try to change people’s perception of how spending money on overheads is not a waste!
2. Overheads = Management
When the news broke about the Oxfam scandal₃ people were outraged, and rightly so, about how a charity could get away with such terrible activities. However, by investing money into their overheads, charities are funding effective management. This means that they can work towards having better processes, procedures, systems and checks within the work that they are doing₄.
3. Charities are experts!
Believe it or not charities, and their employees, not donors, are experts in the work they are doing, and they know what is best for their beneficiaries₅. If donors had their way and all their money was invested into front-line delivery, it would be pointless as there would be no ideas around what to do with it. To get the best possible front-line delivery, money needs to be put towards supporting employees and providing them with the best frameworks and resources to do their jobs effectively, such as good offices, I.T. and training to name a few!
4. Effective, qualified and passionate staff!
Some people adopt the mindset that those working in the charity sector should do so out of the good of their heart, and they should not be earning lots of money₆. However, just like businesses, charities need qualified and highly skilled staff to ensure their work is as effective as possible and can have the biggest impact as possible. Senior staff working in a charity are earning less than those working similar roles in the private sector but is this really fair?₇ Charities should want to hire the best people possible for their jobs, and they need to provide competitive salaries to do so.
5. Overheads = IMPACT!
Ultimately, charities spending money on overheads are making an investment. It may not be going directly to the cause as people perceive ‘it should,’ but it goes towards generating MORE money for the cause in the long-term! In 2013, Oxfam spent £2million less on fundraising, resulting in them raising £37.2million less in donations₄. Thomas Muirhead, CEO of International Development charity Child.org argues how overheads hold potential for real change in the world, providing an example of when they spent 100% of £10,000 donations on admin costs for a new fundraising idea. That turned into £35,000, and then £150,000 to spend on the charities mission₈.
So…I think that we as a society need to move away from wanting instant results from the donations we make, place our trust in the experts and know that by investing our money in overheads, we are helping the cause even more than if it went directly to the front-line!
Often charity investors focus on the immediate impact within the narrow parameters of a particular cause. Utopy believe this needs to be balanced with a focus on long-term, infrastructural change to ensure improvements at a system level.Utopy.uk