While I'm quite in favour of donating money it deeply saddens me when NGOs end up spending the donations on the wrong things. Largely, you would expect that the cost of raising funds isn't much. Not more than 10% of the money collected should go towards things like paying commissions to those that collect funds, or costs of calling up people to pay, or advertising.
In the OXFAM India Annual report, I found a few disturbing elements. Look at their collections:
Adds up to Rs. 66.5 crores. (1 crore is a 100 lakh, 1 lakh is 100,000)
Of this, 58.76 crores came from "Affiliates", which include other Oxfam worldwide branches like Great Britain, Australia, etc. You don't have to really spend money in getting grants from affiliates, do you? So effectively the fundraising costs for those grants are zero.
The funds raised in India were about Rs. 7.2 crores, where nearly 6.6 crores were from individuals and the rest from corporates. This is where you have to call, and use advertising and pay commissions.
So how did they spend the money?
Incredibly, they spend 501 lakhs - or 5.01 crores on fundraising costs. They actually collected (ignore the affiliate grants) 7.2 crores, and spent Rs. 5.01 crores on it?
That's 70% Fund Raising Cost!
Yes, other staff costs and admin costs add up to 10.8 crores, which is a lot, but you can excuse that because people have to be paid well to work properly at NGOs. And this as a percentage might reduce, we'll give them the benefit of doubt.
I got a call from Oxfam asking me to pitch in for some programme and that's when I checked these results. When I confronted the caller with these numbers she transferred me to her supervisor, where the conversation goes like this:
Me: I was telling [name] that I checked the figures at Oxfam, and that you have spent Rs. 5 crore as fund raising costs, in order to collect Rs. 7.2 cr.
Me: (Wondering what to say) Well, you can't expect me to donate if I'm going to be paying your fundraising costs.
Perhaps she wasn't from Oxfam. Perhaps she was the fundraising cost. Miffed that I should be so arrogant as to demand that my money (or 70% of it) shouldn't go to pay the call center.
My few conversations with people from the NGO industry tell me that it's horrendously difficult to raise funds, and the raising costs are huge - from telephone expenses to call centers to compensating fund raisers. It's also sad that people in India don't donate, since 7 cr in a year for an organization the size of Oxfam is ludicrously low. Corporates are giving a miserable 60 lakhs only. But with 70% fundraising costs, who will donate?
I would love to hear from someone at Oxfam correcting me - this is from their own report, but I'm happy to note if they are paying commissions to their affiliates are getting a cut from their grants or something.
NGOs have to get more transparent in India, and reduce such costs. But perhaps I rant too much. I don't give any money at temples, and many people do, and they don't care if most of that money is siphoned away or used for "uncharitable" purposes. Maybe you should donate and not care about how it is used. If you agree, please click the link below to make a payment to a very good cause:
(Thanking you, your's sincerely, etc.)
Note: Oxfam has responded.