Did you ever wonder about the efficiency of a charity or non profit that you support? I’d guess one of the things you really want to know is how much money the charity spends on the cause it represents and the other question is how much money is spent on fundraising itself.
It’s difficult to believe that a fair percentage of money received by the typical nonprofit doesn’t cover the cost of raising that money in the first place. But a recent study showed just the opposite apparently.
This tidbit from Nonprofitquarterly was interesting:
A new study using the most recent IRS data available through GuideStar and performed by the Scripps Howard News Service has found that 15,389 nonprofit groups, or 41 percent of all United States nonprofits with annual budgets of $1 million or more, represent on their 990s that they spend exactly nothing on fundraising. While there are some situations in which this might actually be the truth, Scripps Howard followed up with further investigation and interviews which revealed that a number of the organizations reporting zero fundraising costs do spend money to raise money but simply do not report it.
Apparently now non profits are more concerned with perception that ever before and show no cost to raise money. This seems nearly impossible unless the organization is classifying expenses other ways and not wanting to report how much they actually spend on fundraising. Or they are simply not reporting accurately.
I don’t know about you but I don’t know many organizations that have so much money coming in that they don’t spend time, money and resources raising money. Do you?
So what does the study tell us?
I believe non profits are under such scrutiny these days that they want to appear so efficient that all they do is above reproach. The problem with that is that by denying the fact that there are legitimate costs associated with raising money the organizations seem less than truthful and possibly lose any gain from the illusion they are attempting to create.