Administrative Costs Are Not Optional
Posted by Allison Fine on March 12, 2008
The panel I was on yesterday at the onPhilanthropy Summit yesterday was terrific (kudos to Tom Watson for doing a great job of facilitating a lively conversation!) Near the end of the session, Charles Best, the CEO and founder of DonorsChoose.org, mentioned that the organization provides an option for donors to support administrative costs — or not — for any project they fund. Now, taking exception with DonorsChoose is akin to criticizing Santa Claus, really it’s a lovely organization providing an easy opportunity for people anywhere and of any means to support all or part of school projects and needs like pencils, books or disposal cameras in largely low-income communities. It’s a wonderful organization that has been magnificently launched and run by Charles and his colleagues — except for the fact that they make the true cost of operating DonorsChoose optional for donors.
As Charles said on the panel yesterday, transparency and openness are critical components of relationships between causes and donors. Agreed, and his organization does a wonderful job of explaining their own operating costs. Here is a paragraph from the area on their website called “Sustaining Operations”:
The price of a student project includes an optional fulfillment fee covering the work performed by DonorsChoose.org (see Fulfilling Student Projects). After clicking to fund a project, the donor may decide not to include this fulfillment fee. By choosing to include it, donors support the necessary resources—staff time, office space, and technology—to bring their chosen projects to life.
Charles said that over 80% of donors choose to provide the fee. But, the problem I have is that it shouldn’t be optional. There has been an overreaction in the nonprofit sector to critics of overhead and administrative fees (prompted by the actions of a few bad apples with excessive fees and costs) to make it appear to donors that it doesn’t actually cost anything to make good things happen. Unless we want Charles and his colleagues to stand outside on a street corner shouting to attract donors to great school projects, they actually do need staff and offices and desks and phones and email and a website to be successful. And we need to stop apologizing for it or pretending that it’s optional. DonorsChoose can be as transparent as they are about the true cost of their services while not giving 20% of its donors the option of not fully supporting their efforts.
4 Responses to “Administrative Costs Are Not Optional”
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nancys60 said
Allison, the point you make is a vital one. Put most simply — there is no art class without the school.
I admire Donors Choose for putting the importance of admin costs out there; but do agree that those are an imperative, not an option.
Only through integrating those in project costs — and clearly saying so — will donors learn what it really takes to make an art class available. Now that’s sustainable giving.
Best,
Nancy
Noorani said
Okay. I know donorschoose does great work. Heck I am currently using their site to fund an $800 materials project(LCD projector). However, I believe 18% fee is too high ($192) is going to donorschoose for one proposed project. That is way toomuch. If we are talking about helping teachers, we shouldn’t be making their goal be $192 further from a reality. I am speaking from a business standpoint. And in I think you are right in that there should be a set ammount that goes to donors choose. However that ammount shuld not be a percentage of the cost of the project being funded, but be dependent on the type of project it is. For example, the operational costs of funding a material good like my $800 LCD projector are the same as a $50 poster. In contrast, the cost of operations to fund a field trip are more than a material project (I found this info on the donorschoose website). Therefore, that so called optional donation that they sneak onto your project should be determined on what is being funded not how much one is asking to be funded. This yields consistency and makes the organization look more reputable to their donors. It also gives teachers like me who teach in urban settings the ability to feel comfortable working with and contributing to donorschoose. Right now their policy is somewhat unethical as it takes too much from more expensive projects that have the same operational costs as less expensive ones. Again, to clarify, the percentage donated should be determined on the type of project, not what the projects costs, inorder to create a fair policy towards teachers and donors. It also makes it easier for more expensive projects (that are hard to fund anyway says donorschoose) to get funded.
Concerned Teacher
links for 2008-03-19 | Tactical Philanthropy said
[...] Administrative Costs Are Not Optional « A. Fine Blog Allison Fine criticizes DonorsChoose for allowing donors the option to earmark part of their donation for administrative costs. I think the problem is with the general mindset around admin costs and that DonorsChoose is creatively doing their best. (tags: blog) [...]
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