Anyone here work in charity finance?

[KenzoBaby]

Hi, I read recently somewhere that it's better to give a bigger donation to one charity than to divvy it up between several charities because it costs money for the charity/charities to process the donations. But it was a USA source so not sure if it applies the same here.

Currently I give £5/m to several charities plus gift aid. How much of this is actually benefitting the charity?

And which is cheaper/better for the charity - direct debits or say a 1-off annual gift?

Thank you!

Yes, of course all charities have costs involved in running the charity - heating, lighting, photocopying, staff costs, postage, fundraising advertising etc etc etc. You can’t generate funds without spending some money. These are usually called “administrative costs”.

How much a charity’s administrative costs are varies hugely, depending on the size of the charity, the nature of their work, and how well run they are. Some might have relatively high admin costs (as a percentage of overall expenditure) but generate a lot of income. Some might have low admin costs but not actually be very effective. So it’s not necessarily the case that the lower the admin costs, the better.

Most of the big charities publish a breakdown of their costs, so you can see how much goes on these overheads. Eg Oxfam’s costs are here.

If you say which charities you are considering donating to, I can probably see if they publish this information.

Re direct debits vs one-off - I think most charities wouldn’t be fussy! Especially if you Gift Aid. Regular direct debits are good though, because they represent a guaranteed funding stream, making it easier to predict future income and plan ahead. But if an annual gift works better for you I’m sure no charity would complain!

This is a good article about charity admin costs.

Another good article!

The important thing is to keep going for long enough with your DD. Depending on how they acquired you as a donor, it can take a very long time to break even (ie cover the costs of donor acquisition so that your money is then going towards running the charity).

If you look at the Charity Commision website, most charities will have their accounts published there. Only smaller ones and new ones don’t. So you can see where your money goes and how much they spend on admin.

Thanks guys, this is all very helpful. I just set up the direct debits off my own back, I wasn't recruited by a charity mugger.

I currently donate £5/month to:

1. Salvation Army
2. DebRA (people with a very painful skin condition)
3. British Legion

I also donate £20/m to my local cat sanctuary where I got my own at from :-)

The Salvation Army and British Legion would most likely have accounts published on charity commission website. The other two may or may not but it’s worth a look. But you can always ask the charity if they have an annual report, often they’re available on their website. I read your initial post as you donated £5million! So I was wondering why you were worried about admin costs!

apps.charitycommission.gov.uk/Accounts/Ends79/0000214779_AC_20190331_E_C.pdf

Salvation Army say they spend 90p in every £1 on services and 10p on admin here

Debra say in 2018 they spent 83p in every £1 on charitable activities page 9 of Annual Report

I can’t immediately find the exact figure for Royal British Legion, but there is a good breakdown of their income and expenditure in their Annual Report on p6-7.

Most charities prefer regular direct debits to one off payments as it makes planning easier and keeps income more consistent across the year.

Don’t know about your local cat sanctuary but you can search for their accounts here - usually best to use their registered charity number to get straight to them (but you can also search by name).

I think what the OP means is whether the cost to the charity of administering the donation itself is greater with 3 x £5 donations rather then 1 x £15 donation. I’m afraid I don’t know the answer.

blueladybird that's how I read it too

I think you're overthinking in the micro OP. It's not that your own personal donation costs a certain amount of money to process, more that a certain portion of all money received goes to overall running costs, the vast majority of which are either fixed or accounted for in advance and often several years in advance. This is true of all charities. It would be pretty much impossible to measure the specific cost to Salvation Army of you giving them a fiver through massive automated systems so I really wouldn't worry about it.