{"id":9432,"date":"2016-03-07T14:11:31","date_gmt":"2016-03-07T19:11:31","guid":{"rendered":"https:\/\/www.canadahelps.org\/?p=9432"},"modified":"2024-11-01T10:18:48","modified_gmt":"2024-11-01T14:18:48","slug":"making-an-effective-donation-means-providing-money-to-keep-the-not-for-profit-engine-running","status":"publish","type":"post","link":"https:\/\/www.canadahelps.org\/en\/giving-life\/giving-strategy\/making-an-effective-donation-means-providing-money-to-keep-the-not-for-profit-engine-running\/","title":{"rendered":"Making an effective donation means providing money to keep the not-for-profit engine running"},"content":{"rendered":"

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For many, making a contribution to a charity or not-for-profit can feel overwhelming.\u00a0 There\u2019s a lot of information in the marketplace that helps guide our decision making processes, but many of us are left asking one key question:\u00a0 \u201cCan I trust the organization to use my donation in the best possible way to achieve its social mission?\u201d<\/p>\n

There is much debate with the public and the media about the issue of overhead ratios \u2013 generally the percentage of a not-for-profit or charity\u2019s operational expenditures allocated to fundraising or administration.\u00a0 There\u2019s a sentiment that by directing a donation in a way that supports a program directly \u2013 in effect keeping the overhead ratio low –\u00a0 that more funding can be allocated to \u2018doing good\u2019.<\/p>\n

But does the average donor have enough information about the inner workings of the organization to make an informed judgement call? Probably not and here\u2019s why:<\/p>\n

Think of running a charity or a not-for-profit like running your car.\u00a0 In most cases you make an initial investment via purchase or lease of a vehicle. Then add ongoing cost like fuel (direct costs); invest in ongoing maintenance like oil changes, replace mechanical parts or ad hoc repairs (overhead); and balance your perception of impact, measured in terms of performance comparability, convenience, safety rating and\/or reliability (impact).<\/p>\n

Running a charity or not-for-profit is similar, from the resources required for your initial donation, to ongoing skilled expertise, office facilities, investments required for better internal controls and reporting or even keeping the lights on to support day-to-day work. In both scenarios, it\u2019s important to move away from thinking solely in terms of overhead ratios towards thinking about the component parts required to keep the charitable or not-for-profit engine in top condition.\u00a0 Check out the infographic below:<\/p>\n

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We shouldn\u2019t use overhead ratios to tell us how much impact an organization is having. Instead, we should use overhead ratios to help us understand the bigger picture, that is, to help us ask questions about why and how an organization is making a difference and what resources it needs to be successful.<\/strong><\/p>\n

Donors should focus on a few key takeaways to help inform better decision making, and to make sure that they are in the driver\u2019s seat for their donation (and not a passenger trying to take a selfie on the road of life):<\/p>\n