Where Does your Charitable Dollar Go?
How do you know where your charitable dollars are going? Are they going to the cause you want to support or are they going to administrative and fundraising expenses?
A Toronto Star investigation in 2002 revealed that almost one in six Canadian charities was spending more money on running the organization than on the actual charitable work. Data from five American states shows that less than half the money collected by for-profit contract fundraisers actually reaches the charities. Meanwhile a 2003 study by Harvard Business Review and McKinsey & Co. found that non-profits in the U.S. could free up $100 billion a year by changing operating practices to become more efficient.
- Moneysense.ca, The 2010 Charity 100: Where is your money going?
In Canada, the charity sector is a $2.8-billion dollar sector, with an average of 35 cents per fundraised dollar being used in fundraising costs. In total, registered charities paid about $762 million to third-party fundraisers between 2004 and 2008. To address high overhead expenses, the Canadian Revenue Agency put in place a rule that stated that spending more the 35% of revenue on fundraising costs could lead to the charity’s registered status being revoked. However, there are still numerous cases of charities using figures that are well above this threshold to pay for external (for-profit) fundraisers and other expenses.
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