New analysis of UK and US charity spending has shown that high performing charities spend more on administration costs.
The findings debunk the popular myth that money spent on administration is ‘wasted’ says Caroline Fiennes, Director of UK consultancy firm Giving Evidence and author of the report.
“Many people believe that charities waste money on ‘administration’, and hence that the best charities have low administration spend. This leads some charities – who should know better – to publicise their low administration costs, and to talk about the amount of their money which goes straight to the cause.
If we look at what is included in the administration figure – such as systems for capturing learning, for improving, for reducing costs – we can understand the findings: it’s spending on those things which enables good performance. Scrimping on them is often a false economy.”
The report which captured data for 2009 and 2011 shows the same correlation between performance and administration costs over the two years.
Source: Pro Bono Australia