Wednesday, March 26, 2008
If You're Happy and You Know It Clap Your Hands
Science Magazine has just published a study that documents something those of us in the philanthropy business have known for years—people who donate to charities or splurge on gifts for others are happier than those who do not. While most of those surveyed assumed they would be happier if they spent money on themselves, the opposite proved to be true. It’s worth keeping the results of this study in mind over the next few weeks as you tally up your 2007 charitable giving for your taxes, or find a crumpled $20 bill in your coat pocket—or even as you deposit your 2008 “economic stimulus” tax rebate.
Tuesday, March 25, 2008
Paint by Numbers
Ellison Research has just published a study that reveals 62% of Americans believe charities are spending too much money on overhead. Those polled indicated that they perceive most charities as spending an average of 36 cents per dollar on overhead vs. the 22 cents these same people believe charities ought to be spending. However, according to The Chronicle of Philanthropy’s comments on the study, most watchdog groups report that well-run charities often spend between 30 and 40% on such costs.
The Chronicle of Philanthropy discusses the study in detail and points out the obvious issue for charities: donors, many of whom have no idea how to run a not-for-profit organization, may be less likely to donate if they think the charity spends too much on overhead.
There is another point that should be noted: donors are now demanding more and more accountability from organizations. Gone are the days when philanthropists were satisfied to write checks and assume that the programs they funded were working; they now seek measurable results, often by way of demonstrated improvement and side-by-side comparisons with other organizations. Donors have a right, and--in my opinion--an obligation, to seek detailed information about how their money is being spent. However, they also must understand that there is a cost to retrieving, preparing and analyzing this data. You can’t demand infrastructure and not expect to pay for it.
Donors, charity “watchdogs,” and non-profit managers must understand that there is no “one size fits all” approach. The percentage that an organization spends on overhead may vary from year to year depending on capital campaigns and projects, one time events, currency fluctuations or other unusual situations. While the numbers are important, it’s the story behind the numbers that paints the full picture.
The Chronicle of Philanthropy discusses the study in detail and points out the obvious issue for charities: donors, many of whom have no idea how to run a not-for-profit organization, may be less likely to donate if they think the charity spends too much on overhead.
There is another point that should be noted: donors are now demanding more and more accountability from organizations. Gone are the days when philanthropists were satisfied to write checks and assume that the programs they funded were working; they now seek measurable results, often by way of demonstrated improvement and side-by-side comparisons with other organizations. Donors have a right, and--in my opinion--an obligation, to seek detailed information about how their money is being spent. However, they also must understand that there is a cost to retrieving, preparing and analyzing this data. You can’t demand infrastructure and not expect to pay for it.
Donors, charity “watchdogs,” and non-profit managers must understand that there is no “one size fits all” approach. The percentage that an organization spends on overhead may vary from year to year depending on capital campaigns and projects, one time events, currency fluctuations or other unusual situations. While the numbers are important, it’s the story behind the numbers that paints the full picture.
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