Impact — that’s a big part of the answer to one of the most frequently asked questions we get at Imagine Canada — how should I decide which charity to support?
When people ask they are often looking for a magic number – how much overhead is OK? What should charities spend on fundraising and compensation? But what a charity spends is only part of the picture and not necessarily the most important part.
If you were presented with a list of all the teachers in a school and the amount of money they spent on their classrooms would you automatically assume the teacher who had spent the least was the best? Likely not – you quite rightly would want additional information such as how well the students did on tests, how many graduated, etc. No one is advocating that organizations spend unwisely – and we are the first to call for transparency and accountability – but there needs to be recognition that there are real costs to tackling some of the most difficult issues facing society. Research shows that in the face of inadequate funding for administration, “organizations resort to the strategies of low pay, make do, and do without that diminish organizational effectiveness.”
Charities do more than simply transfer resources from one group to another – there is tremendous value added. Let’s look at an example of homeless youth. Someone who is concerned about overhead spending is free to give money directly to a young person in need. In this scenario there is a direct transfer of resources – no middle entity and no extra expenses – but also no value added to the street youth. The same conditions that led the person to live on the street may very well be present when that donation is spent. However, it’s a different situation if that money is donated to an agency that provides training, low income housing and advocacy on behalf of youth. Yes there are hard costs to this intervention – but ultimately a greater chance for a better outcome for having invested the extra resources.
A few times a year an e-mail makes the rounds purporting to reveal improper spending in the charitable sector. The e-mail’s claims have been discredited – even at one point making the snopes.com list of the top 25 urban legends – and yet the message seems to stick. For the past year we’ve been working with others to shine a new light on our sector’s work – to celebrate the enormous impact of our organizations and to broaden the lens through which our sector is viewed. Charities and nonprofits continue to help build, shape and define our nation and yet we haven’t always been very good at telling this story. We’ll have more to say on this in the New Year and we’re hoping that all Canadians will join this new conversation.
As for urban legends, I can’t tell you for sure that Bigfoot doesn’t exist, but I can tell you that being able to evaluate charities solely on their spending is definitely in the myth category. Real impact requires real investment.