Millions of Thames Water customers have this week received leaflets from WaterAid containing this:
WaterAid should know better. This graph perpetuates the dangerous lie that charities’ spending on governance and fundraising is somehow separate from ‘work on charitable objectives’. They’re not: they’re integral to it.
First, what does this graph actually say? It states that 23% of WaterAid’s spending is not on its charitable objectives. Call the regulator: this seems to be admission of fraud or deception on a giant scale. The graph states that WaterAid’s fundraising and governance are not work ‘on our charitable objectives’: what do the trustees talk about if not its our ‘charitable objectives’? In a well-run charity every penny is spent in pursuit of the charitable objectives.
Second, why is this graph there? Presumably because WaterAid thinks potential donors will be impressed by how much of their money goes ‘to the actual cause’ and how little gets ‘wasted’ along the way. So WaterAid trains donors to think that a charity’s job is simply to ‘carry’ money from the donor to the beneficiary with minimal depletion. In fact, any decent charity will ADD value to donors’ money – through expertise, volunteers, economies of scale, partnerships, learnings from elsewhere, and so on. Many beneficiaries have been well-served by organisations doing R&D, or campaigning, or knowledge management, which may result in none of the money going ‘to the actual beneficiary’ and yet have massive impact. WaterAid’s graph makes it harder to raise funds for that type of work.
Third, it goes the wrong way. This graph – and others like it – implies that the less a charity spends on governance, the better. How wrong. Any decent organisation has great governance, and invests in it since it strengthens the organisation’s ability to serve beneficiaries. So, we learn from this graph that WaterAid doesn’t value its governance. It also seems to think its fundraising isn’t for ‘our charitable objectives’ – what is it raising money for then?
The evidence shows that the best charities spend more on both admin and fundraising than do the bad ones. So, by showing off the lowness of its spend on those items is, WaterAid is providing evidence that it’s no good.
The sole criterion on which donors should choose charities is their effectiveness. And the sole criterion which responsible charities encourage / educate donors to use is effectiveness.
WaterAid should grow up. In the interests of beneficiaries, many of are trying to guide donors towards being more effective, and graphs like these don’t help. The misinformation that efficiency = effectiveness makes life worse for beneficiaries by training donors to choose ineffective organisations.