There is constant conversation, especially among the Millennial population, regarding the overhead costs of various charities. The reasoning behind the concern is that some non-profit organization spend their dollars inefficiently, or less efficiently than others and, therefore, don’t deserve our donation dollars. What we need are gifts that have impact. And what we need is to be able to develop metrics that measure that impact. How many dollars does it take to change a life, feed a child, cure a disease? Did organization A spend less money to get the same results as organization B? And what’s a worthwhile cause anyway? Who needs symphonies and art museums when there are homeless people sleeping in the doorways of those same institutions?
One of my thoughts is that we are focusing on the wrong metrics. Charities are not the enemies of other charities. Nor should they necessarily be the bellwethers. And, truly, we should not use for profit corporations to gauge the operations of the non-profit world either. My belief is that we should consider using government as the benchmark. Federal, state and local government does the closest work to charities. In fact, charities are intended to provide or enhance services governments are unable to offer.
We must remember that people who give to charity, do so voluntarily and, hopefully, because something about that single organization makes them feel better in some way. We pay taxes because we have to, not because we necessarily want to. We don’t focus much time on what our government dollars cost us but there is no doubt, no charity is as inefficient as our various governments. Below is the breakdown of what $100,000 of federal income tax was spent on in 2018. This does not include what happened at the state, county, or city level. Unfortunately, it does not include how much went to “overhead” but it is nonetheless still telling.
Going forward, we should consider using this as our metric for efficiency and impact.
2018 Federal Income Tax Receipt April 15, 2019