CRA Charities Listing

[needsome]

Hi All,

I received a letter from the CRA (Canada Revenue Agency) about their Registered Charities Listing recently. I went to their web site and looked up some of the charities I have been giving to and noticed that while most of the charities spend about 20% on fundraising and administration, the Canadian Cancer Society and the Salvation Army seem to have spent ~45%. I calculated the percentage by adding the "Total management and admin expenditures" on Line 5010 and "Total fundraising expenditures" on Line 5020, then dividing the sum by "Total expenditure" on Line 4950.

I am not an accountant, so I'm not sure if this is the correct formula to calculate the percentage spent on fundraising and administration. 45% seems rather high and if this is correct I am considering changing my support to others that only spend ~20% (ie 80% used for the actual charity).

Can anyone on the board confirm if my calculations are correct and/or explain why these two charities have such high expense ratio?

This forum seems like a good place to post my question as I assume most pooners have higher than average incomes and probably give more to charities.

Thanks in advance for any information,

Needsome

 

[Pimmel]

your calculation sounds right, what is the ratio of dollars earned for dollar spent?

 

[needsome]

Since I expect charities to be not for profit, the ratio of dollar earned per dollar spent should be 1. I Think

 

[trackstar]

Hi All,

I received a letter from the CRA (Canada Revenue Agency) about their Registered Charities Listing recently. I went to their web site and looked up some of the charities I have been giving to and noticed that while most of the charities spend about 20% on fundraising and administration, the Canadian Cancer Society and the Salvation Army seem to have spent ~45%. I calculated the percentage by adding the "Total management and admin expenditures" on Line 5010 and "Total fundraising expenditures" on Line 5020, then dividing the sum by "Total expenditure" on Line 4950.

I am not an accountant, so I'm not sure if this is the correct formula to calculate the percentage spent on fundraising and administration. 45% seems rather high and if this is correct I am considering changing my support to others that only spend ~20% (ie 80% used for the actual charity).

Can anyone on the board confirm if my calculations are correct and/or explain why these two charities have such high expense ratio?

This forum seems like a good place to post my question as I assume most pooners have higher than average incomes and probably give more to charities.

Thanks in advance for any information,

Needsome

As opposed to lesser known charities, these advertise in popular magazines, TV and radio. The percentage is higher, but so are the total in donations.

 

[sinfulsydnee]

Excellent Question!

When dealing with very large charities such as the Salvation Army and the Canadian Cancer Society, it is common for their management, admin and fundraising expenditures to fall into a higher percentile than, say, your local humane society...

the rationale is two-fold...first of all, they are national charities with branches in cities and towns across the country - some of these branches in smaller centres will not run as efficiently as those in larger centres and need to be "carried" bi the national office - the national office itself has to be staffed in addition to each branch office being staffed...there are national programs that each branch must run along with their own localized programs - case in point, the Canadian Cancer Society's daffodil campaign and the Salvation Army's mailings (they are bulk mailers but still can be rather costly) - research has shown that the more often a "friend" of the charity is mailed the more likely that "friend" will turn into a donor...which leads me the second part of the rationale...

National charities tend to be event oriented and volunteer driven...back to the daffodils, door to door campaigns, high end donor events, Red Shield Appeal and retail stores to name a few...all these programs require staffing, marketing, advertising buys, stewardship programs, volunteer appreciation and excellent management bi development professionals who are usually designated with an AFP - the designation given bi the Association of Fundraising Professionals...this is the group who monitors charities to promote ethical fundraising and best practices, administers the testing required to earn the AFP designation and ensures that charities and individuals who are members follow the guidelines laid out in The Donors' Bill of Rights...all very important and sometimes costly factors the public is rarely aware of...

With this information in mind, one can safely justify the higher percentage of expenditures IMO...it is important that you, the donor, research which charities you want to support! Be sure they are sanctioned bi the Association of Fundraising Professionals! I don't know what the national count is but here in Manitoba there are over 10,000 registered not-for-profit organizations all vying for the same pool of donors...religious institutions, hospitals, universities, diseases, social services, sports and arts...that is the order from highest to lowest percentage of support these groups receive from individuals who give...there is nothing wrong with making them earn it bi being savvy, knowing why you want to support a particular charity and making sure your charities are held accountable for their expenses - particularly if they are higher than what might be considered average...

One last thing...if you calculated the total management and admin costs, that would also include those staff positions related to consumer programs...in the case of the Salvation Army, this would include housing and shelters which would push their budgeted expenses for management into a higher percentile with little or no revenue stream being generated to compensate...none of these expenditures should be included in the cost of fundraising.

 

[bcneil]

Since I expect charities to be not for profit, the ratio of dollar earned per dollar spent should be 1. I Think

I think thats a lot to expect. Even if they have an small office with a phone, and lighting, and everyone there works for free you won't get 1:1

 

[needsome]

When dealing with very large charities such as the Salvation Army and the Canadian Cancer Society, it is common for their management, admin and fundraising expenditures to fall into a higher percentile than, say, your local humane society...

Thanks for your detailed reply. I should have listed the other charities that I was comparing them to. The Canadian Red Cross ~14%, World Vision Canada ~19%, Plan International Canada ~22%, Canadian Cancer Society ~29% (not 45%. I made a mistake on my original post), Salvation Army ~46%. Even if I check into the local Salvation Army returns, they are still greater than 25%. I will probably decrease my contributions to the Salvation Army next year unless someone can explain why their inefficiency seems so high.

I think thats a lot to expect. Even if they have an small office with a phone, and lighting, and everyone there works for free you won't get 1:1

Maybe I didn't understand the question. I assume that "dollar earned per dollar spent" means for a non profit organization, every dollar earned (and/or raised) is spent (admin cost, fund raising, actual charity) so that the organization does not have a profit or a loss. Perhaps Pimmel can clarify his question?