Thank you for the thought provoking editorial. I have researched the charities I donate to on a regular basis. I understand totally that there is an administrative cost to managing a charity but I take great exception when the top administrative officers are making hundreds of thousands dollars or more — I feel strongly that they are working I the wrong place and have withdrawn my support.
Being transparent means the charity should not only upfront identify the percentage of funds going to administration but disclose the CEOs salary and benefits. Thank you for that….. You do have to pay for top talent, without which your end result will be diminished.
Not only does the single-mindedness of cost-efficiency measures reduce accountability to accounting, it also neglects the consideration of impact. Some well intended programs have significant side effects and some actually entrench the very issue they are attempting to resolve.
Should that be rewarded with investment? Thank you for this analysis, and articulate defense of charities. We need to find ways to permeate Canadian thinking. Has the article been submitted as an editorial piece to national newspapers? Thank you again for these thoughts.
I like War Child because they focus on supporting local groups already operating in the countries they focus on. That even your professional bean counters had so many questions beyond the numbers does say a lot about why we give and who we give to. Many valuable observations and some very valid points.
Nevertheless, one of the criteria I will continue to use in determining my personal donations is the ratio of fundraising costs to funds actually raised. The article made me take another look! Precisely, Brad. This is the article I wish I had written. I talk about this in my fundraising workshops; when I reassure people in the charitable sector that they are MORE efficient with funds and have lower overhead than most businesses, the relief is palpable.
Thank you for this excellent review. Excellent article! Why people focus on inputs rather than outcomes has always bewildered me. It would be great if you could get it published on the op-ed page of a major newspaper. But it is not just the media that cause ill-informed comment and the focus on two virtually meanless statistics.
A big part of the problem is the CRA, which is apparently just launching a special audit focus on the sector. Thanks for highlighting an issue of charities are described and marketed, and suggesting a practical application of the need for a more nuanced approach to the issue. I appreciate your wisdom and your candor. Lack of transparency and disclosure. It has been years since I looked at the numbers myself but I have seen references online and in the newspaper National Post.
And the question then must be asked, how much does CanadaHelps. Have the charities posted their three most recent years of full, audited financial statements and do those statements support the numbers they reported to the CRA? Have the charities published information online that demonstrates the charitable work they do and the impact it makes on their cause, using plain language and quantifiable performance metrics?
In the process of analyzing thousands of charity tax returns, we found many that need improvement. Including financial efficiency metrics among our benchmarks is controversial. We agree, but only to a point: a charity that underpays its staff and cuts corners to save money is not a good charity, even though its efficiency metrics might look great.
But there are certain standards donors should be able to expect. Muscular Dystrophy Canada is an example of such a charity. For the past three years, about two-thirds of its total annual budget has gone to overhead costs, with just one-third directed towards research, patient assistance and awareness for muscular dystrophy. She said she was hired a year and a half ago with a mandate to restructure the organization to make it more efficient.
Stead-Coyle said Muscular Dystrophy Canada has cut its workforce, moved employees into home offices and cut down on travel by using video conferencing. However, a charity that spends more than 35 cents of every donated dollar on raising that money should look for a more efficient fundraising method. To calculate that ratio, we use the same formula as the Canada Revenue Agency, dividing fundraising costs by the sum of tax-receipted donations and fundraising revenue.
According to its financial statements, the charity, which supports and raises awareness of Canadians with disabilities, spent 56 cents of every donated dollar on fundraising in the fiscal year, 76 cents in and 66 cents in In an emailed statement, chief operating officer Doramy Ehling quibbles with the way Financial Post Magazine and the CRA calculate the fundraising ratio. She says she believes government funding should be included, as well as the cost of writing grant proposals and other efforts to secure that funding.
He says the best way to provide full transparency to donors would be to report both ratios — the cost of raising money from individuals as well as the cost of raising money from the government.
We source our financial data and ratings from Charity Intelligence Canada , a third-party watchdog that analyzes Canadian charities. Their high-quality, evidence-based research is unique in the non-profit sphere, and we appreciate their efforts to highlight exceptional charities in Canada. We based our report on the methodology used for the report, informed by Charity Intelligence data and augmented with information on charity salaries and revenues from the Canada Revenue Agency.
The more efficient a charity is with its donations, the better the finance score. The organizations included in our list range from large hospital foundations to local food banks, from local homeless shelters to international aid groups. Their missions are inspired by various ideologies and beliefs, and they are run by and for Canadians of all kinds. This year, we took advice from Charity Intelligence and used the most updated data available, whether it was from the , or fiscal years.
To be included in the Charity , organizations must have been assessed and rated by Charity Intelligence, a third-party watchdog. This means the best, most consistent and comparable data between organizations versus their Canada Revenue Agency filings, which are not always up to date. We do use CRA data for wages, as it is other unavailable as a comparable dataset. Transparency is primarily informed by Charity Intelligence ratings on two metrics: financial transparency and social results reporting.
Charity Intelligence scores this category based on the availability of audited financial statements from each charity. Organizations that post audited financial statements for the two most recent years or more online receive full marks.
Charity Intelligence also grades charities by how transparent they are about their impact. The social results reporting score measures what information charities provide about their programs and spending to their donors via their websites, reports and other communications. Most charities report their administrative costs and fundraising costs separately, allowing us to make a measure of each versus annual revenue.
Some, however, lump administration and fundraising costs together. We award a maximum of 30 points for the combined total.
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