Charity costs

Administration and management costs


The salaries of senior staff, together with the costs of managing and administering an organisation are often of great interest to supporters.

Many supporters cling to the belief that charities should be run by well meaning individuals who work for little, if any, pay. Of course the reality is that the work many charities now undertake is technically complex, involving the management of large networks of staff and volunteers, often in many different countries.

The complexity of such organisations requires that they be well managed if the cause is to be addressed. The payment of professional and competitive salaries is therefore essential and while these are often rather lower than in the commercial sector they are nonetheless a significant expense.

It is therefore unrealistic to expect organisations to spend very little on management. Typically charities spend between 5 and 13% of their total expenditure on this.


What is an acceptable figure?

 The position is as complex as with fundraising. The structure of the organisation, the nature of the work it undertakes and it's accounting conventions will all play a role in determining this.

It should also be noted that 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 supporters 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 would not wish 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 greater than 15% of its income on administration. Such charities we would ask to justify their level of expense.