Charities Need to Come Clean on Fundraising Costs

According to a recent article in the Chronicle of Philanthropy, more than one-fourth of charities that received $500,000 or more in gifts reported spending nothing on fundraising.

That’s right, nothing. Nada.

While there are lots of folks who would like to think that all these charities are just remarkably efficient, those of us who are in the fundraising profession know the real reason is because charities are under tremendous pressure to under-report their fundraising costs.

I find this fact disturbing for two reasons. One is obvious—that by misrepresenting information on a legal document such as this, the charities are opening themselves up to potentially severe penalties and public loss of confidence.

The second reason is more subtle, but nevertheless important. By under-reporting fundraising costs, they are perpetuating the myth that it doesn’t cost anything to raise money. Not only are they are deceiving themselves and their constituencies, they make the charities that are honest and open about their fundraising costs look bad by a false comparison (not to mention that they’re disrespecting the entire profession of fundraising).

Most charities have very reasonable fundraising costs. If we’re all open and transparent about it, we can start to educate the public about this issue. But that will be hard to do as long as so many charities are cheating.