Oxfam India: Spends 70% of Donations as Fund-raising Cost

21 comments Written on June 3rd, 2011 by
Categories: Oxfam

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:

image

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?

image

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:

Supervisor: Yes?

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.

Supervisor: Okay.

Me: (Wondering what to say) Well, you can't expect me to donate if I'm going to be paying your fundraising costs.

Supervisor: Okay.

(Hangs up)

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:

Make Your Donation To Me!

(Thanking you, your's sincerely, etc.)

Note: Oxfam has responded.

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About the Author:
http://www.capitalmind.in
The man behind Capital Mind. Deepak is a co-founder at MarketVision, a financial knowledge company. Deepak also provides data research and consulting services, and now lives in Bangalore. Connect with him at deepakshenoy@gmail.com.

21 comments “Oxfam India: Spends 70% of Donations as Fund-raising Cost”

Hi Deepak,

I am usually very skeptical about donating NGO’s as its difficult to figure out what exactly
they do with the money. I recently came across http://www.rangde.org/ and I am trying to figure out how genuine they are. Just thought of sharing this here so that if anyone knows more about them, they can comment.

-thomas

@Thomas,

I have dealth with RangDe. I have been social investor with them since some time and I have good experience with them. What I give to RangDe is not a donation but money lent. RangDe connects individual person who is in need of fund to individual person who is willing to lend money. Loan is considered as unsecured borrowing. RangDe charges interest to borrower to cover their costs. I have not faced any problem of repayment so far. I am quite happy with RangDe and would recommend them. To me this model of lending money that get repaid, looks sustainable.

Deepak,
A long time reader here. I almost *never* make “Great Post”, “I agree” comments, so there wasn’t an occasion to say Hello. OK, so here it is now: Hello *waves*.

You’ll realise you’ve stirred a hornet’s nest here. This is a major issue even among other countries. RSPACA in UK gets particularly singled for this kind of arrogant mismanagement and misallocation of hard-to-come resources. And so does Oxfam, Band-Aid, etc..etc…

Like yourself, the issue morally weighs on some; yours truly was/is one of them, and when I used to ask the charities I got a similar arrogant response as well from C.R.Y, Geriatrics Society, RSPCA, Oxfam,….(Yes, I used to be big on donations, but not any more though).

But, for the vast majority of the people working in these environs (all over the world), they see the apparatus as a milch cow, despite understanding the fact that these are donations from people who scrimp on their own pleasures and desires to contribute to a larger, worthier cause! This rotten attitude stinks.

Here’s an article on this point. The writer was a brilliant chartered accountant, worked for various CA firms that included an international auditing firm. He then got fed up with the machinery and decided to join an NGO to do some “Good work” (leaving that stinking, dirty plage carrying rat Lloyd Bankfein to do more of “God’s work”!).

Here’s a moving article he wrote about the twists and turns of his life so far, before deciding to move away from the NGO, and directly work with tribals in Chattisgargh. I hope it goes well for him.

Don’t bother with money for it only attracts spongers and hangers-on. Donate your time to some cause, or better still just be part of your own micro movement. I like your articles on FI, I am moving along those lines, because once you know that you won’t starve on the streets, life takes on a different meaning. Then one can contribute in a much larger way in a personalised fashion. Everybody doesn’t need “to be an institution like Batman”, just being “Bruce Wayne” is sufficient.

It is a good article.
Best,
Surio.

Thanks mate, much appreciate the comment. Sometimes I think my desire to earn money is simply so I don’t have to think about having to earn money anymore. Then I can do my own number.

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First of all, 7 cr. in donations for a prominent NGO like Oxfam is a pathetic reflection upon our people and our culture. I can only imagine the plight of smaller organizations, many of which are trying to do some very good work, but the majority of which will end up without resources, without having achieved much and very demoralized, not to mention being made the butt of all those “jholawala NGO/social-worker” jokes and taunts. These same folks will not bat an eyelid when someone “donates” a crown or chariot made of gold to some prominent temple.
Time to bring accountability to this sector, ESPECIALLY to any and all NGOs of a religious nature – and time to tax obnoxiously wealthy temple-trusts and chartered airplane using babas to oblivion!

Hi Deepak,
It’s a good subject that you’ve touched on regarding the cost of raising funds by NGO’s. I had been informed that the costs were high – in some organizations as much as 80% !
I refused to believe that could be the case, but now…. So whats the solution ? If we can celebrate our Indian billionaires we should also be able to make them feel guilty about them doing so little ? Shareholder interventions during AGM’s asking about a co’s csr and charitable donations. Get hold of the ceo’s e mail and bombard it with demands, what can we do ?

This is not unique to India – perhaps it is new, since ‘professionally run’ NGO’s are only just beginning to make their mark. A few years ago, when I was in Singapore, the National Kidney Foundation, which used to collect huge sums of money, through monthly contributions and mega-events (coupled with convenient dial-in donations), was embroiled in a similar controversy, which ended up with the CEO going to prison! Closer home, I was moved by the stories and citations for a trust down in South India, which fed destitutes every day – and sent a modest donation. I was surprised when, together with my “receipt”, I got a fancy brochure with glossy photographs. Must have cost a bomb! And I then wondered, how much of my donation actually went to feeding hungry people…

I am not much of a believer in charity. But a great believer of self sustainable business models that not only benefit the downtrodden but also provide some profit for the entrepreneur. Your article convinced me yet again, that if one really wants to make a long term contribution to one’s society, one should start a business venture that provides jobs to needy and help families sustain themselves. Starting another NGO for such purposes would prove futile. Nothing comes free in this world and even charity has a cost, as suggested by the numbers u show. Charity (in the form or NGOs or the so called CSR activities of the corporate) doesn’t make economic sense, and even though it satisfies a few individual’s higher need for “self actualization” (which I sometimes suspect is the real reason why so many NGOs are started every year), it doesn’t really provide a long lasting solution to societal problems.
Interesting numbers and an informative article.

Dear Deepak, I am sorry you had trouble getting an explanation of Oxfam India’s cost structure from our staff. I just saw this and will give a detailed response later. I just wanted to point out that the cost of Oxfam India’s fundraising is not 70 percent but significantly lower. The figure of Rs 7.2 crores was our income in that year whereas the figure of Rs 5 crores was our total expenditure –including capital investment expenditure such as cost of opening an office which will generate incomes over several years. Some of these funds for investments in fundraising are grants that we receive from Oxfam International and other Oxfam affiliates. I am happy to sit with you any time you would like a detailed explanation of our cost of fundraising. Nisha Agrawal, CEO, Oxfam India

Dear Nisha, Many thanks for replying. I’m at deepakshenoy [at] gmail dot com if you’d like to clarify.

According to your annual report, the Rs. 5 cr. is not your total expenditure – tht is much higher, at around 55 cr. , with 39 cr. as programme expenses, around 10 cr. in admin/other salaries and the “fund raising cost” at 5.01 cr.

For capital investment expenses, there is a head called “Assets Purchased”, for stuff that you bought. For rentals the figure should be in admin costs (which was 6 cr.) I don’t think you would have put in the “fund raising cost” head.

Will be happy to learn more from you, do post here or email, thanks!

Dear Mr. Shenoy, first of all i appreciate your efforts and time for such an indepth analysis. however, one must understand that Oxfam India is comparitively a new organisation! it started as an independent organisation only in Sep 2008, which is less than even 3 years!!! As far as fund-raising cost is concerned, initialy it’s bound to be high for the simple reason that you can not expect productivity of employees to be at its peak in such a short span of time! if one wants dividends one has to be patient enough to invest first and than reap the dividends! it’s like any other business where in the initial costs are high and it takes some time for achieving break-even-sales!! i am sure you understand the value your words have on the citizens! and in a country Like ours, 1st of all there’re handful no. of supporters for such noble causes, on top of that such comments of yours may dampen the spirit even further!

Oxfam India analysis is true to what you have analysed. If only you get to know the internal dynamics you would know how the funds raised from donors is utilised. Oxfam does not work directly with the beneficiaries – it works with grasroot level NGO. Might as well give you donation to one of their grass root NGo rather to them. That way you would save on costs involved by giving donation to Oxfam India.

Hello Mr Shinoy,

I agree with Mr shiv kumar pandey, about your appeal to donate for yourself i promise will think about that, meanwhile the article is informative. It is another thing that the costs for raising funds is as high as 70% but there is a consumer complaint that the remaining 30% is also not utilised properly either, see the link below!!

http://www.consumercomplaints.in/complaints/oxfam-india-c356377.html

I don’t suppose Mr. Agrawal provided further explanation did he?

In the meantime I am on the verge of withdrawing from an Oxfam fund-raising event for the following reasons:
1. We are paying to participate i.e. we cover administration costs, so none should (I hope and trust) be taken from the funds raised. So be it.
2. We are raising the funds. Oxfam feels it appropriate to ‘require’ that everyone raise several hundred pounds each. OK I agreed to participate so that’s a mistake that I won’t repeat.
3. The event starts at 6am and they require everyone in our team to show up before 10pm the previous night to sign up in person. This is in the middle of the countryside several hours away from where I live. Despite requests for some flexibility on this, they absolutely insist that everyone must register in person, together at the same time, the night before. And then go away. And then come back in time for the 6am start. They decline to explain why. Even when I suggest a number of alternatives.

I can’t see myself ever supporting an Oxfam event or fund-raising effort again.

I get the distinct impression that they fail to appreciate that fund raisers are doing them a favour, not the other way around.

Very disillusioned.

David, Nisha has responded here: http://capitalmind.in/2011/06/oxfams-response-to-expense-ratios/

Your experience seems to be harrowing and I think you should write about it to their UK chief. This is not something to be condoned but obviously if there is a reason why they have such restrictive practices they should have told you by now.

I guess its partly the NGOs’ structural inefficiencies, but I agree partly it has to do with the values of our population and their relative nonchalance to the ample poverty/problems they see around them. I do feel bad that neither the corporate nor individuals in our country donate much to noble causes, unlike in US where I live.

I am guessing in the Maslow’s hierarchy of needs theory, most of folks in our country are gradually moving up the pyramid but most are still at the bottom.

BTW I actually made donation to you on the link you embedded. But I think you meant it as joke, as it was a really small $2 donation on that link!~

I am regular reader of your blog and have always found it very informative and entertaining as well.

Manish Jain(MJ)

Thanks Manish! Got the $2, and I promise to make it up to you!

Much appreciate your compliments too. You’er right, we do have an issue, and I don’t think it has to do with needs. The issue seems to be that we don’t like to donate, out here. Plus, that in the name of donations, many NGOs have been frauding the public. I hope that changes!

Its more to do with trust. Last year I got a call from an NGO that they are looking for donations for a specific treatment for a specific person in need. I responded and asked them to update me over email as to the well being of the person. I got no response. Do you think I will donate again?
This time I got a call from Oxfam and thought that I will dig a bit, and I got here. Thanks for confirming my suspicions.
People want to donate but don’t really trust most agency coming forward. Transparency will help.

I have worked with oxfam India in fund raising for few months, without any knowledege of any of the projects hoping whatever am doing is for the best cause,being fundraiser i didn’t had a single project visit in last 7-8 months,forget about donar visit,which they promise. Also i think oxfam employee are the most highly paid employees sitting on bed of roses, getting work done by contract based people(regarding fundraising).Last year around december they have annual meet for 3 days in a 5 star Goa located hotel,they don’t travel without air-tickets,n so many things.One day, heard for a senior person “matlab, hamane jitana kamaya utana khaya” form that day was totally distrubed to work in such froud company. thnxs Mr.Deepak,you encourage me to write my experience.

Hi Deepak,

Good to read your article about this thing and I agree with the points you mentioned. But there is huge costs to raise funds. I mean the people at Oxfam India, Udaipur Office called me approximately 13 times, before I can meet them to schedule a meeting. People in India truly don’t take donation seriously and when asked for that, its in their least priority. They are busy in corporate meetings, like me :), and will meet only when they are very very free. So that jacks up the cost exponentially.

I hope my 70% doesn’t go in vain and are used appropriately in Kotra village for orphan child education and widows mothers’ training.

Have a nice time ahead.

Rgrds,
Ojal Suthar,
CEO,
IT0091 Consultancy Services,
http://it0091.com