I attended a session given by Sean Triner of Pareto Fundraising a few years ago, where he asked people to name the charity they held in highest regard. After listening to a few answers, he in turn asked: How much of their revenue goes to programs vs. administration?
Nobody knew. This classic standard of rating nonprofit organizations wasn’t used by anyone in a room full of professional fundraisers.
While some people demand this test and adhere to it, most give from their hearts. And I’ll argue that the heart is the better judge.
For starters, the percentage of revenue an organization spends on administration is not a reliable indicator of quality. In holding themselves to this standard, some groups don’t spend ENOUGH on fundraising, limiting their mission overall. Others can understaff, hurting efficiency and programs, as those who deliver help can’t give personal enough attention … or they rein in salaries, leading to underqualified staff, or cut corners leaving service delivery short on resources.
A bigger issue is that this program/administration ratio is easily (and commonly?) misrepresented just in the fact that some efforts can be identified as “educational” (thus program related) and at the same time “fundraising” (administrative). Nothing wrong with this, in my eye, but it does cast some shadow on the entire standard.
So what? Well, if you use this standard, you’re probably helping worthy groups. But if you don’t, I wouldn’t go digging for program/administration stats. I might take a look at the organization’s books, though. An audit. Or just look at their annual report with a careful eye, not so much on the numbers as the transparency of their financial dealings.
What’s clear is likely clean.