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<\/p>\nMost of us haven\u2019t worked in charities, which makes their inner workings seem somewhat mysterious. So it\u2019s natural to ask where donations actually go.
\nThe implied question is \u2018does the money I donate actually go towards the cause\u2019? The problem is that this question is neither easy nor straightforward to answer, and before we answer it we need to dive into what a charity actually is.<\/p>\n
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It\u2019s easy to picture charities as a kind of money funnel \u2013 collecting money from the general public and directing it to where it\u2019s needed most, be that cancer researchers or African orphans. You put cash in, and good results pop out the other side. The charity then takes a cut of the money in the process for providing this service. The seductive simplicity of this model means that, when you start thinking about finding the \u201cbest charity\u201d, it seems that the charity that takes the smallest cut of your money must be the best one. Surely that means that the most of your hard-earned dollar is going to the people who really need it, right?
\nWell, no, not really. Let\u2019s take a step back and think about what charities actually do and how.<\/p>\n
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Charities are, fundamentally, very similar to businesses. They employ people to do tasks, and spend money to achieve their goals. The only real difference is that charities, instead of aiming for a profit, aim to change the world for the better.<\/p>\n
In every other aspect they\u2019re the same \u2013 they need accountants, and receptionists, and IT staff, and everything else. None of these things are frivolous or unnecessary – running a large charity without an accountant is not being frugal, it\u2019s a recipe for disaster. In a very real sense, the accountant is just as essential to the charity achieving its aims as the scientist in the lab doing research.<\/p>\n
The exact distribution of how their money is spent depends, obviously, on the charity. Some charities will give out grants to other organisations to achieve specific goals . Others will spend money on advocacy, or in-house researchers, or field work, or providing services. This depends on what the charity wants to achieve, of course, but also how it has decided to reach those aims. Two charities with the same goals might have very different means to reach them .<\/p>\n
Let\u2019s take an example \u2013 heart disease. It\u2019s a serious problem, the number one killer of people in developed countries. A number of charities have been set up to tackle it. But how? Charity A aims to reduce deaths from heart disease, and gives grants for medical research to create better treatments. Charity B has the same aim, but believes that prevention is also important. So perhaps they set up an education program, teaching children about the risk factors for heart problems and encouraging them to exercise. Charity C also wants to reduce deaths from heart disease through prevention, and evidence shows that adults aren\u2019t exercising enough and that better bike paths help. So they work to convince the government to install them.<\/p>\n
Which of these charities is \u2018right\u2019? They will all probably reduce deaths from heart disease in different ways. Medical research takes a long time, so Charity A might not see results for a decade or more, but could help people around the world rather than locally. Educating children has even longer term results \u2013 those children wouldn\u2019t get heart disease for another 20 or 30 years. So which one is best? That\u2019s a question for the academics and strategists.<\/p>\n
So the answer to the question \u2018Where charity money goes\u2019 is a simple and rather unsatisfying one. It goes where the leaders of that charity think will have the most impact. The good thing is that you can find out what they believe by reading their annual report. It should tell you in some detail what the charity is spending money on and, more holistically, what it considers important.<\/p>\n
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Of course, charities don\u2019t always make the right decision with where to spend money. Most charities are very good at spending money effectively, and it\u2019s a very rare bad egg that spends it deliberately poorly. A charity might spend money on an unsuccessful advertising campaign, or on an ill-fated fundraiser, or on an inefficient intervention. Sometimes this is done in bad faith, but more often it is simply because charity workers are not omniscient and make poor decisions sometimes. Unfortunately, aside from in exceptional circumstances, it\u2019s almost impossible to tell how many good or bad decisions are made in a charity. All you have is the outcomes, and sometimes (like our heart disease example earlier) you might not even have those for a decade or more after the fact. Telling which of our heart disease charities is \u2018most efficient\u2019 is about as difficult as telling which one is \u2018best\u2019.<\/p>\n
Of course, there are a number of things incorrectly regarded as \u2018waste\u2019, such as paying CEOs. This is a common refrain against charities, but remember that large charities are very similar to businesses. You want that charity to be run well, and to do that you need a CEO who isn\u2019t terrible. And finding CEOs that are both capable of doing a good job and will work for low pay is rather difficult. This is a small part of a larger discussion about how and how much charity workers should be paid, and there are no simple answers as to how much is the right amount. But it seems like the right amount is definitely more than nothing.<\/p>\n
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Behind the question is an anxiety \u2013 a desire to have your donations make a difference. You want to look inside the black box of charity to see what your donation actually does. Of course, the simplest answer to this is to read what the charity itself says. If there\u2019s a charity you\u2019re interested in, have a read of their annual and financial report to get a sense of where they\u2019re putting their money and what they consider priorities. If that\u2019s not enough, contact them and ask what they\u2019re doing. It is very unlikely that they\u2019re putting it in some kind of Scrooge McDuck-style vault for their CEO to swim in.<\/p>\n
This blog post won\u2019t tell you who you should donate your money to. Donations are a personal choice, and made in line with personal beliefs as much as with raw data. If, after reading through a charity\u2019s annual reports, you don\u2019t like the way they distribute their funds, then don\u2019t donate to them. If you do, then do.
\nThere is obviously more to it than that \u2013 some charity approaches are genuinely more cost-effective than others, and depending on the field you\u2019re interested in there may be a substantial amount of literature on exactly what works best to solve that particular problem. The more you read, the better informed your choices will be, and the more likely that your donation will have a substantial impact.<\/p>\n","protected":false},"excerpt":{"rendered":"
Most of us haven\u2019t worked in charities, which makes their inner workings seem somewhat mysterious. So it\u2019s natural to ask where donations actually go. The implied question is \u2018does the money I donate actually go towards the cause\u2019? The problem is that this question is neither easy nor straightforward to answer, and before we answer […]<\/p>\n","protected":false},"author":1,"featured_media":160,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6,7],"tags":[],"class_list":["post-159","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","category-giving","post-preview"],"_links":{"self":[{"href":"https:\/\/www.changepath.com.au\/blog\/wp-json\/wp\/v2\/posts\/159","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.changepath.com.au\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.changepath.com.au\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.changepath.com.au\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.changepath.com.au\/blog\/wp-json\/wp\/v2\/comments?post=159"}],"version-history":[{"count":1,"href":"https:\/\/www.changepath.com.au\/blog\/wp-json\/wp\/v2\/posts\/159\/revisions"}],"predecessor-version":[{"id":163,"href":"https:\/\/www.changepath.com.au\/blog\/wp-json\/wp\/v2\/posts\/159\/revisions\/163"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.changepath.com.au\/blog\/wp-json\/wp\/v2\/media\/160"}],"wp:attachment":[{"href":"https:\/\/www.changepath.com.au\/blog\/wp-json\/wp\/v2\/media?parent=159"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.changepath.com.au\/blog\/wp-json\/wp\/v2\/categories?post=159"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.changepath.com.au\/blog\/wp-json\/wp\/v2\/tags?post=159"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}