Should staples and sticky tape be paid for by donations?
When Oxfam and PayPal launched 100% Giving back in January it sparked a huge debate on my blog. Well it’s back this September, PayPal is paying Oxfam’s admin costs on all donations made through PayPal. ‘100% on seeds and schoolbooks. 0% on staples and stickytape’ reads the tagline.
Is 100% Giving a good thing or does it skew the public’s views on what are ‘essential’ costs in running a charity?
I think it’s a bit of a no brainer – running charities costs money. However whether it’s donor or government funded it’s SO important that there is some sort of culpability and transparency for where that money is spent. We define exactly what we spend out money on within my department and some of that goes towards "general operational costs" .This is towards our monthly overheads for anything from paperclips, to rent, to skype calls.It’s like investors demanding 100% profit from their first equity stake. Supporting a Charity because you like what it does by donating is doing just that. You are helping them carry out what they are designed (I hope) to do.
I should preface this with a wee note: I think Oxfam are awesome. I think they do great work and I’m happy to donate to them. In fact, I’m happy to donate to them knowing that some of my donation will be used to pay the person who cashes the cheque. And that a miniscule proportion was spent on the piece of paper that they send me to thank me. I’m fine with that. (I’m assuming that Oxfam do still send thank you letters. If they don’t, well, the point’s the same and I’m sure that you’re all intelligent enough to understand.) Because you know what?EVERYBODY NEEDS PAPERCLIPS. Without "staples and stickytape" how on earth do you know where the seeds and schoolbooks are best sent? And for that matter, how do you send them there without stamps, envelopes, staff, a courier service… How do you thank donors? How do you put on a fundraising event IN THE FIRST PLACE? How do you cash a cheque? oh no, wait, it’s fine, you just go over there and pick some money from that money tree. and maybe go speak to the guy down by the Clyde that’s selling magic beans, I hear he’s doing great trade. This sort of thing gives me the rage (well that and world poverty, patriarchy & the return of Big Brother, but you get the idea) – because we should be talking about effectiveness not efficiency. Better to spend £1 wisely than to piss £10 up against a wall. Better overall to spend £10 wisely – and the only way you do that is to have people and systems in place which allow you to know what "wisely" is in the first place. "Effectiveness" though – much harder to evidence. Efficiency is a hard outcome that you can evidence through a couple of spreadsheets and some creative accounting. Actual effectiveness though, the degree to which you achieved your aims and objectives – difficult. And even more so depending on your cause. It’s not like the third sector hasn’t been trying but we need better models. Of *course* we’re all angry about charities that spend 98% on admin and 2% on "the cause". Of *course* it’s wonderful that PayPal has made (what is essentially) a corporate cash donation to Oxfam – bloody hell if I could get one of those right now I’d be well happy – but the manner in which it is presented panders to a public misconception about the nature of charity finance of which the sector would be better rid.
Whilst I would never begrudge Oxfam thus opportunity and whilst also I dont doubt PayPal were only trying to encourage givers, I wonder whether thus scheme will in the long run actually skew donors expectations.Charities and other voluntary organisations rely on donations to carry out their good works – the direct project work and the back room, less sexy, day-to-day operations.Donors should be educated about what it takes to keep the show in the road, not given the impression it should be possible for 100% of their donation to be used directly on projects.Obviously this all comes in the proviso that charities work hard to keep their costs low and to spend as little as possible on overheads. It us up to the charity to work on their donor relationships and to foster trust, through honest and transparent information.
Please excuse the typos above!
My only concern with charities working with for-profit organisations is who is getting the better deal? If the clear answer to this is the charity (and their beneficiaries) then I’m happy. In this case it seems obvious to me that Oxfam is getting the better part of the deal. Good charities need good people & good systems etc, and those don’t come cheap. They should always be looking at the volunteer & in-kind donation pool for opportunities, but core activities usually need careered staff & these have appropriate costs. Oxfam is amongst the best when it comes to keeping running costs relatively low.The same goes for individuals working for charities. If they are not contributing more to "the cause" than their salary etc costs then the organisation needs to retrain them, redeploy them or even remove them in extreme cases. This requires investment too. And good management (again, more valid costs).Smaller non-profits will have higher overheads as a percentage of income than large charities, so perhaps it’s time to factor that into the old equations too, eg (costs / income) * size-factor? I was going to close with a link to IntelligentGiving, but it appears to be offline, so here’s the closest thing I can find. Worth a read… http://www.philanthropycapital.org/about_npc/about_us/intelligent_giving.aspx
I’m not sure whether what Adrian says about smaller charities/voluntary organisations overheads is true. We (Yorda Adventures CIC) have very good overhead percentages and we are a small organisation. We don’t have many full time staff, share our premises, don’t have any fancy IT systems etc. I don’t think it’s fair to say that big organisations spend a greater proportion on direct work.
Megan, yes I’m sure it will vary greatly – I was making a general point about economies of scale more than anything. Big charities aren’t always the best & smaller/newer charities have a vital role to play, sorry if that wasn’t clear. Personally I’d like to see something like IG revived, although the Charities Commission does seem to be doing more to make it easy for folks to understand the comparable accounts of charities…
I’d just like to add that my personal experience is that Oxfam are not good with their spending. I used to work there (Oxford HQ) and oversee a large budget. My boss was always encouraging the team to spend on things that weren’t really necessary because we had underspent on quite significantly. I was told that if the money wasn’t spent then it would go back into other projects, so I have no idea why he was so desperate to spend it on nothing.
This campaign irritated me (a past regular Oxfam supporter who does still support them ad hoc) before and it’s irritating me again. It’s understood that there is this idea among (some) donors that there is wastage in charities and instead of addressing it it’s playing to that audience. I realise we have to take chances where we find them but at the risk of damaging the sector – even in some small way?In the UK as a whole we have this fear of administration (think government cuts being turned on Whitehall to show they understand the pain too as if Parliament of any political colour could cope without its army of people doing the legwork). We loathe ‘pencil pushers’ without ever acknowledging that without the grease of people doing perhaps small but probably important jobs, the cogs never turn. People make businesses great. The best companies in the commercial world understand this. There is a vague notion, I feel, that charities should restrict their ambitions to small successes and pipe dreams – that they should not actually attempt to make money to expand and really solve the problems they exist to try and solve.This is not to say that they’re aren’t discussions to be had about genuine waste. If, as Joan says above, there is a tendency to push for money to be spent because it’s there in a particular charity, then maybe that charity need to think about the way budgets are managed (perhaps they wanted to spend it for fear that budgets would be cut and future useful projects might not be possible). And discussion needs to be had in the context of understanding that making money costs money and that sometimes there is educational, marketing or brand awareness value in doing something with a low financial ROI (not just social media, but things like education programmes etc). I just think buying into some semi-mythical man-on-the-street notion that charities are pissing money into the wind isn’t the way to do it.
Hi Alex, I like your comments. Trust is an immensely difficult thing to build and a notoriously easy thing to destroy. It only takes a few pounds badly spent to skew peoples’ attitude to giving.The worst thing I have ever heard about charity fundraising was at a training session. The trainer will rename unnamed. Their opening gambit was basically, we’d better get used to lying, because that’s the only way to be a successful fundraiser. To this day I don’t know why I remained in the room to hear the rest of his inane thoughts.I think when you agree to partnering with a large corporate body as Oxfam have, or in fact when you gain sponsorship from anywhere, you do have to ask yourself what the giver’s motives and expectations are, and what strings might come attached. I have turned money down in the past on that basis.If we assume the position of the poor relative, always begging and whining, we will be treated such. All players in our sector need to remember the importance of what they do, and have some self-respect. We need to be brave and instead of taking anything and everything passed our way from individuals, business and local government we need to only accept those offers that strengthen our long term position and do not threaten our organisation’s reputation, or – in the case of the large charities in particular – the sector’s reputation.
You all seem to agree that the partnership is a good thing, in the sense that it’s a massive financial injection from PayPal for a great cause, Oxfam.However, it seems the tone of the partnership, ‘100% on seeds and schoolbooks. 0% on staples and stickytape’ may help perpetuate the myth that successful charities don’t need good systems, professional staff and the occasional bit of stationary. Given that, how could the 100% Giving partnership have been framed differently? Perhaps a simple one-off donation to Oxfam? Could PayPal have volunteered staff time to support projects? Could they have committed to simply waiver the costs of processing donations? Or is 100% Giving actually a good thing which doesn’t need to be changed at all?
I see the dilemma here, but I can’t help to think that such a partnership is a good thing. How great would it not be if all charities could have their costs funded by corporations rather than from the individual donors? It’s a dream scenario if you ask me. Better for donors, better for charities, and really a very good way to help for a corporation.However, I think it is important to communicate clearly that this does NOT mean, like you say Ross, that charities are sloppy with their money. That there are already good systems in place to keep these costs down. And that it DOES cost money to fundraise and not to mention spend the money correctly. I would have liked to see a more precise communication there rather than a catchy tagline ("we’re paying oxfam’s costs so they can spend YOUR donations on seeds and schoolbooks").
How about Paypal just waived Oxfam’s cost of signing up to them, or at least their bill for the month or something? Because then a *disposable* overhead would actually be reduced. It’s amazing how paypal actually end up making themselves look (on the surface) so nice, when actually they’re still pocketing all the money it costs Oxfam to collaborate with them anyway!And also, big yes’s to lots of what s written above. It makes my blood boil when people can’t appreciate the universal need for sustainability – for example – a successful charity needs professional staff to do the job properly. who need to be paid enough to survive, and enough to keep them in their job (not that they are motivated by money, but really good professionals aren’t going to stay in a job forever that abuses them by paying them an unreasonable, un-livable wage). So salaries are important, for the charity to be successful and deliver on it’s very valuable aims. Same with paper clips, staples, sellotape etc. Yes it should be transparent, so donors aren’t paying for the finance officer’s penchant for £2.50 handmade vintage paper fasteners from Uzbekistan’s last empire, but only to a degree. Like AlexDRobertson says, investors in anything else don’t demand 100% profit on first investment. Do people really think magic beans exist?! Because no charity i’ve ever worked for has come across them yet, so in the meantime they still need to send letters, invest in fundraising events, thank their donors to make them feel valued enough to reinvest….etc etc etc…. Maybe that bloke on the Clyde can give us all some growing tips.