Administrative Costs Are Not Optional

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.