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Charity costs
What is an acceptable figure?
This is a difficult question to answer. The structure of the organisation, the nature of the work it undertakes and it's accounting conventions will all play a role in this. Also, good management typically costs more than poor management, so seeking to reduce costs in this area may ultimately be counter-productive as talented staff move on.
Our advice to donors concerned about this issue would be to ask the charity what it spends on administration (or check their annual accounts) and if appropriate ask them to justify their performance.
Our own position is that we wouldn’t want to support an organisation spending less than 5% of its total expenditure on good management. Without this we would lack confidence that the objectives of the organisation would be achieved.
Similarly we would normally have concerns about a charity spending more than 15% of its income on administration. Such charities we would ask to justify their level of expense.
Our own position is that we wouldn’t want to support an organisation spending less than 5% of its total expenditure on good management. Without this we would lack confidence that the objectives of the organisation would be achieved.
Similarly we would normally have concerns about a charity spending more than 15% of its income on administration. Such charities we would ask to justify their level of expense.
More on Charity costs
- Costs of administration and management
- What is an acceptable figure?
- Why can some charities claim to have no administration costs?
