Using Donations Effectively

Today’s donor has a real interest in seeing a charity perform effectively and often effectiveness is measured in ratio of expense for general and administrative to professional service.

In reading these statistics, one should bear in mind that facts can be presented in a most favorable light by assigning some fundraising costs to programs – many agencies do that (statistics do not lie but liars can figure). Here at the Carroll Center we are almost religious in our attempt to be totally ethical in maintaining our accounting records and in presenting them to the public. When the public reads that a charity is able to use 95cents of every dollar raised for programs, and only 5% goes to administrative or fundraising costs – it is hard to believe them given the cost of postage and salaries today.

It could be that this particular charity raised lots of money, so 5% represents huge dollars as in the case of the 9/11 fundraising when literally billions were raised in a short period of time by the Red Cross, and other charities OR the charity decides to attribute to a program-expense ledger portions of staff’s salaries who are engaged in raising funds.

With our attitude you can see how pleased I was to read our auditors evaluation of the agency’s overall performance:

Program Expense Ratio: Benchmark is between 60-65% spent on programs.
Total expense spent on programs at the Carroll Center:

• Carroll Center FY 2006, spent 82% on programs

• Carroll Center FY 2005 spent 82.1% on programs

  General & Admin Expense Ratio: benchmark is 35% or less
  Total expense spent on G&A

• Carroll Center FY 2006, spent 14.6% on G&A

• Carroll Center FY 2005 spent 14.1% on G&A

  Fundraising Expense Ratio: benchmark is not to exceed 35%
  Total expense spent on fundraising:

• Carroll Center FY 2006, spent 15.9% on fundraising

• Carroll Center FY 2005 spent 5.2% on fundraising*
• _(we received an unusually large bequest that year, so expenses over large revenues made the percentage much smaller)_

  While we are on cautionary notes let’s talk about program statistics. Thirty years ago when the Carroll Center was helping out a new charity by giving them free space in our buildings, I happened to be on a review committee for grants when I was startled to read that this one person shop reported serving 17,000 in the previous year so I approached the director to ask how she justified this number when I could clearly see that in the one person office perhaps a few hundred persons a year were served.

  She responded that she had a counter installed on their telephone so that as they provided an information and referral service – every time the phone rang a unit of service was provided. Needless to say I was shocked to learn this cavalier approach to statistics gathering.

  Recently I heard the following story – Agency A receives a request for assistance from a teacher in her classroom of blind children – when Agency A provides the service they count in their statistics not only the one teacher but the teacher and the 300 students enrolled in the school, figuring all of them will profit from the help given this one teacher. Again my mouth dropped.

  Our statistics represent truly a face to face interaction. So a week of service does means a student was enrolled in class and attended for the week, and an hour of service represents an instructor meeting a student, whether an elderly person in their home to train then how to use a cane or a blind student (K-12) being instructed in the use of Braille.