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There is an interesting debate over what a charity should spend to raise money. You can hire cheap talent, pay for limited marketing and raise money. Or a charity can hire an Ivy League MBA, take out network ads and raise 1000 times the money.

In other words, which is better. Raise $100,000 at a 5% cost and net $95,000, or raise $1,000,000 at 30% cost and net $700,000?

That Ivy League MBA would be foolish to take the job anyway. Say their earnings potential is $500k per year. If they took the job as the Executive Director of a charity, they might be paid $100k, if they're lucky. Then they would be beaten on for wasting money and not keeping fund raising costs to a min. On the other hand, if they take the $500k job and make an annual donation of $100k to the charity to pay the Exec Director's salary, they would be hailed as a hero.

In my town, a few of us pay all the annual overhead for the local United Way. This way they can raise money by saying that 100% of your donation will fund programs. However, they still have the same overhead as a percent of what was raised. People can be stupid, but it works.

The point it that the percentage itself doesn't say whether there is malfeasance or waste, nor does it measure the effectiveness of raising money.
 

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You say "hire an Ivy League MBA and ... raise 1000 times the money", and imply that you might raise 1000 times the money by increasing the overhead from 5% to 30% but then your concrete example only raises 10x the money.
Really? That's your retort? It was an example. I could change the zeros and the point would make more sense?

I've seen that kind of slick bait and switch from Ivy League MBAs too many times. Me, I've only got a Pocket MBA, but I know that I'd rather own 10 small business with 5% SG&A expenses than one large one with 30% overhead. And I'll apply the same principal to charities as well.
The free market is a fine way to approach this. You send your money wherever you like. The stats, however, are starting to show this benevolent concept is doing less good overall. Ironic.

I sit on three charitable boards. Efficient use of fund raising is taken as an oath at each. There is no goofing around. However, I've also seen good fundraising ideas abandon, because they would mess with the stats. For example, a grassroots local group wanted to volunteer to run an event to raise money for a the surviving child of a single mom who was killed. They needed to pay for catering, advertising, etc, but would volunteer their time. It would undoubtedly have worked, but the cost ratio was going to be higher than the charity overall ratio and, therefore, increase their year end reporting. Therefore, the Executive Director refused to do it. That make sense?

They were told to do it on their own and just donate the net proceeds to us and we would give it to the family. Doesn't that just manipulate what it really cost to raise the money?

There is way too much in our system that is designed to appease the uninformed.
 
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