How Does One Choose A Good Charity?
This is a vexed question and many people would choose different answers as we tend to choose those issues that are important to us. However, one question that is often asked is “….how much of what is donated actually goes directly to the purpose or cause of the charity…..”? i.e. How much is spent on Admin and other costs? According to the ‘Australian Charities and Not-for-Profits Commission’ (ACNC), “In Australia there are no common charity accounting standards or definitions which prescribe the way charities must categorise particular costs”. The ACNC goes on to say “When people donate to charities, understandably, they want to know that their money will be used effectively and will make a difference to the cause that they support. For our charity (DA$AW), 100% of all donations made* go directly to the charities we support. As we encourage more sponsors, we will be able to continue in this way, well into the future. *(except ‘Sponsorship’ donations and Members fees)
It would be fair to assume that the larger the charity, the greater the administration costs although this is not a reliable measure as some charities with high Admin costs have a greater impact on the community they serve. Very small charities like ours are fortunate in that we have been able to protect ourselves from increasing costs by obtaining sponsors, as stated above.
CHOICE conducted research in September 2016 and in part of their report they offered some advice on how to choose a charity that you may wish to donate to;
Check that the charity is licensed by its state or territory regulator. Each state has different exemptions. In some states for example, religious organisations don't need to be registered,.
What can be taken from this information is that whilst Admin costs are important it should not necessarily be the sole criteria for selecting a charity to support.