Where’s Your Donation Really Going? A Guide for the Sceptical Donor.
We get it. Trusting charities can sometimes feel like a bit of a gamble. You want to know whether your donations are actually reaching the cause you care about. In this article, we’re going to dive into the world of charitable organizations and shed some light on what happens behind the scenes.
The Trust Issue: Where’s Your Money Really Going?
Charities do a great job in our world, making a real difference where it’s needed. But when trust in NGOs declines in 17 of 27 countries, (Edelman Barometer report 2023) it shows more and more people are getting wary. Why? Because they aren’t sure where their donated money is ending up. This causes a ripple effect — less trust means less giving and less giving means charities struggling to do their good work.
So, we want to peel back the curtain a bit and look at how charities work. Because understanding how your donation is spent can go a long way in building back that trust.
To make their magic happen, charities need resources. That could be anything from paying for a program that helps people, to keeping the lights on in the office, to salaries for the staff, and yes, even some marketing. These expenses are known as overhead costs, and they’re part and parcel of running any organization, nonprofits included.
When you’re thinking about how much of your donation is going straight to the cause, remember that these overhead costs are part of the equation. Big-name charities in places like the UK spend somewhere between 26–87% of their income on their cause, with most estimates suggesting it’s usually more like 60–70%.
Interestingly, smaller charities often spend a higher percentage of their income on their cause than the larger ones. This doesn’t mean they’re doing a better job, it just means they’re smaller and have less overhead to deal with. The larger the charity, the more overhead they naturally have.
Recognizing these costs is a big step in understanding how charities work. Sure, it feels good to think of every cent of your donation goes straight to the cause, but without these resources, charities wouldn’t be able to do their work effectively.
A Quick Lowdown on Overhead Costs
Like a backstage crew, charities have a lot going on behind the scenes. Though volunteers and donated goods help, these aren’t always enough. Challenges arise, making cash donations more efficient as charities can buy what they need. So, where does your money go?
Admin Costs: From the office rent to professional advice, charities need to keep the wheels turning.
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Salaries and Benefits: A team of passionate professionals to run programs, manage volunteers, handle the finances, and ensure everything’s above board, don’t come for free.
Fundraising Costs: The saying, “you have to spend money to make money” rings true for charities. Be it organizing fundraisers or hiring special staff, charities need to invest in bringing in funds.
Marketing and PR: Like any brand, charities need to be visible. They might have to maintain a website, run ads, or even invest in public relations.
Training and Development: Charities invest in their team’s development to ensure they’re the best at what they do.
“People want to know that their donation not only reaches where it was intended, but that it’s having an impact. And to see charities holding the high ethical and moral standards expected from the sector.”
— Rui Domingues, director of finance and operations at the Charity Finance Group”
Tips on Spotting a Transparent Charity
Trust and transparency are your best friends when deciding which charity to support. Here are some things to consider:
Charity’s website: Look for clear information about how donations are used. Good charities have clear goals and update their donors on progress.
Annual report: This can usually give you an idea about the cost of fundraising. For more significant donations, ask for a complete financial report.
Do some research: Check out reviews and ratings from trusted sources like Charity Navigator, Guidestar, or the Better Business Bureau.
By taking these steps, you can donate with confidence, knowing that your money is making a real difference. Let’s move from Sceptical Donor to Confident Giver, shall we?
How we can move quicker
At EleaTek, we’re working hard to bring trust back to charity and social impact. With our tracking application, we earmark your donated money and you can see precisely how the charity spent it, ensuring a worry-free donation experience.
We are a bootstrapped startup, in the MVP phase. We’ll be releasing our MVP to a handpicked group of people. If you're interested to enter our Circle of Trust, feel free to send us a message: hi@eleatek.com
