I've come across this sentiment many times: non-profits should avoid "wasting" money on fundraising or advertising or salaries, and should put donations directly into the work of the organization's mission.
On the surface this seems good. If I'm donating money to Mercy for Animals I want my money to go to paying for investigations or other advocacy programs. I don't want them to use 30 or 40 cents out of each of my dollars to raise more money or promote the organization or pay staff, do I?
But are our expectations in line with reality? We want these organizations we support to change the world, but we limit how and where they can utilize our donations. We want their staff to work for less pay than an entry level job at a for-profit company and we want their work to be effective. And we want them to have millions of dollars without spending money on raising money.
It doesn't make sense.
In reality, organizations need to spend money (yes, YOUR money) to raise more money. They may need to spend $.50 to raise $1. They might be able to spend $.10 to raise $1 in some cases too.
Businesses spend $.50 to earn $1 all the time.
And how do organizations raise money?
One way that gets a lot of criticism is by sending out unsolicited mail. This is called "prospecting" or "acquisition" by fundraisers and "junk mail" by you. You may be the person who tosses these mailings away all the time, or you may be the person who opens them and sends in a donation.
This way of bringing in new donors is expensive. Often it costs $3 or more to raise $1. Yes, that means that these mailings lose money almost 100% of the time.
So why do them? Isn't this a waste of money?
This is one of the basic misconceptions about how fundraising works. Donors do not usually seek out organizations and spontaneously give to them (you are of course the exception). Virtually all first gifts to an organization come as the result of some sort of acquisition campaign.
The value of these campaigns is not to make money. The value is to raise donors. Over time the people who mailed in their gift in response to this piece of "junk mail" will send in more donations and will become "profitable." Yes, fundraisers use the word "profitable."
Really, non-profits don't sell products, but they do sell hope and dreams and the service of doing work for you that you can't do yourself. You can't run a network of animal shelters so you give your money to an organization that can.
I want organizations to be efficient and effective. I don't want them wasting my money. But I think we need to rethink what it means to be efficient and pay attention to how we measure effectiveness. If it honestly takes an organization $400,000 to raise $1,000,000 (a net gain of $600,000) and they do good work with that money, than why should we demand that they reduce the money they spend on fundraising so that it fits into the ideal of 20-25% cost-of-fundraising?
And, beyond fundraising, organizations need good infrastructure and good people, which means that they need to spend money on salaries, benefits, offices, etc. Just because an organization exists to do good doesn't mean it and the people involved should be underpaid and overworked.
I've hardly had an original idea in my life, and this post is mostly an amalgamation of many ideas from books and articles. One book that's been floating around my consciousness for a while (but I haven't read it yet) is Uncharitable by Dan Pallotta. I'm pretty sure he says all of this much better than I have or really ever could.
Here is an article that sums up a lot of the problems with measuring an organization based on how much they spend in fundraising: "Cost of fundraising: the watchdog's Strawman in nonprofit assessments.".
It is clear from numerous surveys (Princeton Survey Research Associates, 2001, et al.) that donors generally prefer that their gifts be used to further the nonprofit's mission rather than be used for fundraising costs. However, that view is akin to wanting one's tax dollars to support the cause of national defense by paying for fighter jets, but not for the copy paper used by employees in the Pentagon. Just as planes do not get used effectively in battle without proper planning, so does a nonprofit's mission depend upon fundraising.
When you are thinking about whether an organization is using your money wisely, don't ask "how much did they spend on fundraising?" or "how much is their executive director getting paid?" Instead, ask "how much have they accomplished?" and "Are they investing in the future?"
Measuring organizational efficiency based on cost-of-fundraising may bring some short term gains, but chances are it will yield long-term ineffectiveness. At the worst it may mean the organization you love because of the work they do will cease to exist.