Are you spending more than 35 cents to raise a dollar?
Ratio of fundraising cost/fundraising revenue in fiscal period
Rarely acceptable: more than 70% (charity nets less than 30%)
Generally not acceptable: 50% to 70% (charity nets 30% to 50%)
Potentially not acceptable: 35.1% to 49.9% (charity nets 50.1% to 64.9%)
Generally acceptable: 20% to 35% (charity nets 65% to 80%)
Acceptable: less than 20% (charity nets more than 80%)
What do you think about these ratios? Is your organization operating in the “acceptable” range today? To figure that out you’ll have to read the guidelines because it isn’t a straightforward calculation. For example, fundraising from government and foundations should not be part of your calculation. And you should include non-receiptable donations.
I took part in a national conference call with CRA representatives yesterday (organized by AFP and Imagine Canada — thank you!). CRA seems to be aware of the many many legitimate reasons an organization might have an “unacceptable” ratio. For example, investing in a bequest program where all the expenses are incurred today but the gifts won’t be received until far into the future. They also acknowledged that start-up organizations or causes with limited appeal or low profile may have to spend more to raise money.
I encourage you to look at the guidelines and give your comments. I’m going to. Some of the conference call participants had great ideas. For example, should this be a rolling average based on several years rather than just one, to accommodate for extraordinarily good or bad years?
Although this evaluation grid is simplistic, I’m happy that someone is attempting to address the very real concerns that donors have about unreasonable fundraising expenses.
Here are a couple of recent articles about the guidelines:
Lessons in charity
Watchdog sets charity rules
New charity rules a good first step
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