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Am I misremembering or is there a website that specifies how much of their donations an NGO uses for non-aid stuff like administrative costs etc?
Yep! It’s called Charity Navigator. It measures the financial efficacy of American non-profits, generally rating them on fiscal transparency, fundraising efficiency, and various other metrics they list on the site.
That being said, please remember that “non-aid stuff” is what keeps the lights on. It’s been proven time and again that the amount a charity spends on administrative costs, in general, is a terrible metric by which to judge their worth.
There are exceptions of course; a charity spending 90% of their intake on admin is probably shady. But those kinds of charities are exceptionally rare because of the shadiness – if you’re going to bilk people on that scale, you register as a business or a religious org rather than a not-for-profit, so that you don’t have to make your tax documents (which tell CN how much you spend) public. Most people who are going to be ripped off by a charity aren’t going to notice you aren’t a non-profit anyway. (For example: Salvation Army is a religious org, and refuses to give their tax documents to anyone, which given what we know of their SUPER SHADY financial practices in the US is probably smart of them.)
So charities, real non-profits, which are that shady are super-rare. Now, add to this that in order to run a good org, you need quality people who won’t burn out. That takes money; one reason the government is offering partial loan forgiveness for people working in NFP is that they can’t keep good people because they often can’t pay them what they’re worth. It’s not unusual for heads of charities to make six figure incomes because that’s what it takes to keep a good fundraiser in the public sector, when they could be making eight figures fundraising for hedge funds &etc. in the private sector.
I mean, look at it this way – I am “non aid stuff” at my org. And I won’t work for an org that won’t pay me at least $55K/yr plus benefits and paid vacation/sick leave, which is actually slightly below average for my field. The Art Institute of Chicago, an institution I would LOVE to work for and who would like to have me, can’t pay me enough for me to cover my rent, bills, and student loans. This is partially because (according to Charity Navigator) the Art Institute puts less than 10% of their money towards administrative expenses. Only 2.7% goes to fundraising, the area I work in. (The Art Institute can get away with this because they have an established circle of very wealthy donors, and really don’t need someone of my caliber.)
Charity Navigator is a good place to pre-vet a charity, to make sure they’re not a total scam, but reading the charity’s webpage with a critical eye and googling for news about them is much more effective.
Upshot – use CN for your early vetting to weed out obvious scams, but don’t use it as a final judgement or in an argument with someone else about a charity’s effectiveness or worth.
YES THIS.
A charity with extremely low admin costs is at least one of:
– Lying about what costs are admin and what costs are not (which I admit gets hair splitting but…I mean things like “our canvassers get 40% commission on donation but we call that Educational Outreach instead of fundraising.”)
– Not paying anywhere near living wage to its administrative staff.
– Egregiously misusing unpaid internships as a cost cutting measure.
– Not complying with laws about data security and record keeping and confidentiality and etc.
– Working in outdated and often unsafe spaces.
– Or if honestly doing none of the above, they are usually a HUGE organization making use of economies of scale. Not a small local grassroots group. The smaller the group the more reasonable a “large” admin % is.
Guidestar is another excellent resource that lets you look up a nonprofit’s form 990, and see exactly where their money is going.
And yeah, you do have to pay your staff a living wage. Most of the nonprofits here (W. MI) have low admin overhead by overusing volunteers and Americorps people for their administrative duties. That’s a less than ideal situation. Also if you are a direct services provider and pay your staff minimum wage, you run the risk of having your staff become clients who need your services, or services from another state agency or org. Which is counterproductive to the mission of most nonprofits!
Helpful things I did not know!
Nonprofits need HR people to coordinate hiring, benefits, payroll, etc. Nonprofits need IT to keep the computers working and the internet connected. Nonprofits need accountants to make sure the money is accounted for and is going where it needs to be. Nonprofits need facilities personnel to replace lightbulbs and keep the place clean.
Don’t encourage nonprofits to underpay their support staff just to keep their admin costs artificially low. We’ve already chosen to accept lower pay in order to contribute our skills to a good cause, but we have rent to pay and food to buy too, so don’t make it worse out of a misguided idea of where the money ~should~ be going. Please.
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