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Fundraising Auctioneer

Scott Robertson Auctioneers Blog

Making Sense of Percentages

Posted by Scott On January 29th

If you’re a television viewer, during the course of any day you’ll find yourself watching a commercial for some national or international charity asking for a donation.

percentages

Many times they only ask for a small, very affordable amount to be pledged on a monthly basis. You know the ones. Save these sad looking dogs in cages. Help feed these starving children in a third world country.

It’s not unusual that during the commercial the voice-over artist announces that 85 percent of all donations go directly to the charity to fight their worthy cause.

The reason for them doing this is quite simple.  The charity believes the higher the percentage they receive from the total donations coming in – the more the public will be willing to give – and be confident about it.

I know this may come as a surprise to some, but I really take issue with the “percentage” marketing technique. It’s not always about the percentage the charity uses for the cause versus administration or operation costs. To me it’s simply about the total dollars raised.

Let me explain.

It doesn’t matter if 85 percent of the money raised goes to the cause with 15 percent used for operation costs or if 70 percent of the money goes to the cause and 30 percent to operation costs – as long as the 30 percent is invested wisely into competent and quality employees and office staff.

Retaining quality employees requires competitive compensation. These quality employees must also have a comfortable office space to go to as well as have good working conditions.  These three things will make the employees feel appreciated.

So often the staff works many hours beyond their contractual obligation. Providing good pay and a great work environment makes those extra hours seem – not only easier to get through – but more productive.

For the record, I am frugal by nature and never wish to see a charity waste money or over compensate the employees, especially the CEO. But the fact is – quality costs money.

Scottt with Mic

Although most donors would love to see 100 percent of their donation go to the cause it’s not always practical. A reasonable percentage should go to wisely utilized operation costs – and that includes everyone from the top staff to the receptionist.

Paying for quality staff members pays for itself in the long run.

Here’s a prime example, albeit not charity connected.

I have a litmus test when it comes to restaurants. When I see a server working in a restaurant for more than 12 months this tells me the quality of the food is consistent, the management appreciates the server’s good work and administrates in a fair manner.  Therefore I assume the restaurant is a healthy place to work and for me to dine. Again, a quality staff pays for itself.

So, when it comes to the percentage of money that goes to the cause versus the percentage of money that goes to operation costs – more is not always better. And I’m 100 percent certain of that!

 

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1 Response

  1. Rav Says:

    There is an interesting TED Talk that touches on this subject.
    Would we prefer that a charity has 10% overhead cost but only feeds 100 people or has 30% overhead but feeds 10,000 people?
    We seem to frown on:
    – fair market wages to attract and keep the best
    – long term strategies with low returns in the initial years
    – professional advertising even if effective because it often increases the overhead percentage but the increased revenue is not taken into account.
    – business stategies

    Posted on February 22nd, 2015 at 12:00 am

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