Sunday 26 October 2014

How much does giving really cost?

Philanthropy is a noble virtue, but it doesn't come cheap and charities have had to make radical cuts, writes Roisin Burke

Roisin Burke

Published 02/05/2010 | 05:00

Two charity scandals have recently burned up news space. The current one concerns audit problems and sexual abuse allegations relating to Irish aid worker Mike Meegan and his Kenyan charity, and another lately involved an $800,000 (€1m) CEO pay packet at the American Ireland Fund.

These are blots on a sector otherwise mostly above reproach, but there's no doubt that controversies like these are prompting people to think about where their money goes when they donate to charity.

Whether you give in to a 'chugger' (charity mugger), put money in a bucket or do a sponsored run: how much is going to the charitable cause, how much is funnelled into administration expenses, collectors or advertising?

You have to spend money to make money, of course, and the biggest charities naturally have some big costs. Around 10c of every €1 you donate goes to staff wages and salaries in most charities, and much the same again goes on administration costs.

Some keep things reined in much tighter. Barnardos and Trocaire say 90 per cent and 95 per cent respectively of every euro you give goes directly to its charity activities. "We keep costs as lean as possible," say Barnardos' Ruth Guy.

An incredible one-third of the income of the Irish Society for the Prevention of Cruelty to Children (ISPCC) -- €2.13m, is spent on "fundraising and promotion" according to its accounts. The figure went up despite the economic turmoil, from €1.66m in 2007 to €2.13m in 2008.

The charities' bete noir is fundraising costs.

Those we surveyed who use paid street, door-to-door or telephone collectors won't say how much of your donation goes on costs like paying private fundraising agencies or their fundraisers.

Most charities have been put under horrendous pressure by the state of the economy. Even in the year of two child-sex abuse publications -- the Ryan and Murphy reports, the charity that supports at-risk children, Cari, was in a "critical" state in 2009.

"As the year progressed it was clear that we were into a fight for survival," Cari CEO Mary Flaherty said in its report, released last week. It made deep cuts and implemented redundancies and a pay freeze.

Fundraising events income fell by half in two years between 2007 and 2009, from €582,772 to €256,888.

Without tycoon JP McManus's charitable trust and an understanding approach from its bankers, "we would not have made it through 2009", she added.

The charity Concern has had two years of pay freezes, slashed 500 staff worldwide and enforced a hiring freeze. Trocaire implemented a pay freeze in March 2009 followed by pay cuts of up to 10 per cent in September last.

Oxfam Ireland's fundraising income fell by 9 per cent last year. Charities with stock market investments have seen them take a hammering in many cases.

The ISPCC's losses on investments almost doubled from €79,170 in 2007 to €146,309 a year later. It showed a deficit of €1.09m in 2008.

The crashing markets is starkly reflected in some charities' investments -- Goal saw its investments plummet by a massive €132,348, from €149,283 at the start of 2007 to just €16,935 at the end of 2008.

Concern's equity investments lost €1.4m in 2008 (all ethically screened, its accounts say). Oxfam Ireland's investments value fell by 13 per cent.

Pension schemes have also taken a drubbing.

Rehab has a colossal €30m pension deficit that jumped from €18.7m to €30.9m between 2008 and 2009, hit by the global equity markets downturn. Concern's pension deficit more than doubled in 2008 to €3.4m but has come back to €2.8m in 2009.

The ISPCC's deficit is €1.09m for the same year, while Barnardos is €3.5m, Trocaire's is €4.7m, a €3m recovery since last year.

Staff salaries are generally around the industrial wage for most organisations but the top brass get sizeable pay packets, with the typical big charity CEO earning in the region of €100,000 a year.

Many big salaries have been cut -- Goal's top pay packet used to be near €125,000, but Goal says no one there is paid more than €100,000 now, and CEO John O'Shea's salary is €98,320.

The top salaries are usually linked to public service pay grades. Some major charities surveyed won't divulge top earners' pay, even where our taxes contribute to it through government funding.

Major overseas charity Concern has an income of €132.3m. Over half of that comes from Irish and other government monies or from the UN and other agencies.

The rest comes from its fundraising activities, so it's not surprising that the advertising and promotion activity spend is €3.6m.

Concern's wage bill for 305 staff including pension costs is €10.9m -- less than 10 per cent of its income.

The average Concern staffer wage is €35,000, but its boss Tom Arnold earns around €120,000, though he took a 10 per cent pay cut last year. Seven others earn over €80,000.

Because its work is Ireland-based, Barnardos has a far higher chunk of its costs going towards staff compared to overseas charities. Of its €24.4m income more than half makes up a salary and pensions bill of €16.3m for its 371 staff. It is state-funded to the tune of €15m and works closely on projects with the HSE.

Barnardos fundraised €4.7m in 2008, but it spent almost half that figure, €2.1m, on generating voluntary income, which highlights how expensive it can be to drum up fundraising.

The top earner (Barnardos won't say who this is) makes €120,000 to €130,000. Five others make between €90,000 and 110,000. Its administration fees were €1.83m.

Likewise Boyzone star Ronan Keating's Marie Keating Foundation has high salary costs because of the nature of its work. More than half its €1.1m income is absorbed by salaries -- €600,000.

"Our health professionals that provide our services are paid the going rate according to national guidelines, as is normal within charities," says chairman David Hall.

Goal has annual income of €66.5m, its most recent available accounts show, with €40m of this from grant income from Irish and other governments and €20.6m from international sources such as non-governmental organisations and the UN. The remaining €6.5m is from donations.

The CEO and public face of the charity, John O'Shea, earns €98,320 -- on the low side compared to some of his peers. Two others at Goal earn between €75,000 and €100,000, according to its last accounts.

It has a €6.9m wage bill for 204 overseas "Goalies" -- doctors, midwives, engineers -- and its UK and Ireland office staff.

It spends €1.17m on its yearly management and administration.

Trocaire's director Justin Kilcullen earns around €120,000 and three others at the charity make over €100,000. Its salaries bill is €6.4m, plus a further €2m on pension and other salary-related costs.

Of its €60m income, it spends €1.7m on management and administration and €1.17m on what are termed "other costs" in its accounts. A further 20 per cent is spent on administration costs. Its top earner makes about €80,000.

The Marie Keating Foundation managed to cut its advertising costs by 30 per cent to €60,000 by striking a deal for better rates with a media provider.

Of the dozen charities we surveyed, most had made swingeing cuts in staff or costs in the last year, typically of between 10 and 15 per cent.

Sunday Independent

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