The problem with charity fundraising

July 16, 2014

Here’s what happened to me yesterday night: I had a knock on the door and in a state of semi confusion (I’m working night shift at the minute) I opened up to two people clad in red. So it wasn’t the mormons or the JWs coming to discuss their religious views, it was the Red Cross –  it was cold outside and as I didn’t have to have complex theological discussions with them, I invited them in. The Australian Red Cross run a lot of good programs such as breakfast clubs for kids in deprived areas, disaster relief, homeless help and watching out for seniors who are at risk – although the talk seemed to be focused on the fact none of the money was going to leave the shores of Australia (which is a bit of an odd premise given that the vast majority of the world is a lot less well off than Oz), it did make me feel that they were a cause worth supporting. Moreover, “100% of my money will go to the Red Cross” I was assured verbally and in writing.  Now that was a good selling point – I don’t feel money I give to charity should be being wasted on things that are not necessary. I don’t really get the point of paying for someone’s trip to some far flung country to raise “awareness” (that very fuzzy and rather odd term) for Breast Cancer. I feel I should be a good steward of the money that I give (hence why I look at using tax relief schemes which allow my money to go ever further) . I ended up agreeing to support the Red Cross monthly for the next 24 months to the tune of $39 a month – no big deal since I was told 100% of my money went to the Red Cross, right? Wrong – no sooner had the two people left the house and I had made myself a cup of Earl Grey, I started to read through the small print of what I had signed. There was the bit where it clearly states that 100% of my gift goes to the Red Cross (underlined for effect)  but under it there was also the following:

“Red Cross pays Appco Group Support a one-time fee of a pre-allocated fundraising budget. This type of fundraising is one of the most cost effective available to charities and allows the Red Cross to plan ahead with confidence”

A fee? Indeed, it would seem there’s a fee that’s been given to a third party for me signing up. Some would argue that the money is from a separate fund but what goes it has to come back in so it’s rather disingenuous to argue that 100% of my money goes to the Red Cross. So how much is this sign-up fee I then started to wonder. Rather perversely, Appco/Red Cross won’t tell you what the fee is. It’s not written down anywhere on the contract but with some calculations I was able to estimate it. Given that the minimal direct debit they would allow you do to was $39 it would seem fair to assume most people would start at that level. On the other side of the sheet, I found some further data.

“The average length of pledge is 5 years, this amount will equate to approximately 17% of the total pledge amount and in year one will equal 85%”.

85% of 39×12 comes to around $400. That is one hell of a slice they are taking there (and that’s assuming everyone is taking the minimal monthly donation – it would be even higher if more people are signing up to $49 or $59 a month).  In the first year Appco have taken $400 and the Red Cross have taken $80 – not exactly a very equitable balance going on there. To argue that 100% of my donation is going to the Red Cross is completely dishonest – it quite clearly is not and it’s clearly fudging the facts to argue otherwise. I understand charities would rather have a regular stream of small amounts being given to them rather than the bulk sum givers who are less reliable and more likely to be affected by emotions (such as the Tsunami gifts). However, to be giving $400 to a third party really does damage their brand in my eyes. Person to person contact is more likely to result in a commitment (or “sale”) but charities have to remember that some of us are very cautious with how the money we give to them is spent. I don’t give to certain charities whose chief executive is getting in my mind far too much compensation for running the charity – is it right that a chief executive of a charity is paid more than the Prime Minister? Ironically, the best paid chief executive in the UK is the boss of the Red Cross. I called the Red Cross up and politely explained to them my issue with this way of selling themselves. My point regarding the 100% figure being at best inaccurate was countered by them saying that only 9% of an average gift is spent on fundraising – fair enough, but those facts have be to be given to the person signing up at the time. They then asked me if I wanted to cancel my direct debit which I did. I’d far rather give the money directly to them via their website without some third party taking their pound of flesh. The problem is after this experience I feel somewhat betrayed – do I want to support a charity that does good things in my community but is quite happy to raise funds via companies who misrepresent to givers where their money is going? In the end, I’ve opted with what I know best – I’m supporting the fund of a hospital where I worked in Niger. I know in this case 100% of my money is actually going to people who need it most. I’m sorry Red Cross – this may be the most cost-effective way of raising money in the short term but there needs to be a bit of thinking about the long term ethical bond with people who support you.