Americans Say Charities Spend Too Much on Overhead, Poll Finds

Sixty-two percent of Americans think that charities spend too much money on overhead costs such as fund raising and administration, according to a new study.

On average, people believe that charities spend about 36 cents of every dollar they receive on overhead, substantially more than the 22 cents the public thinks charities ought to spend, according to Ellison Research, a market-research company in Phoenix that conducted the study.

Actual spending on overhead varies greatly, studies have found, but most watchdog groups say that well-run charities sometimes spend 30 to 40 percent of their income on such costs.

The study was conducted in August, but released just weeks after Congress held hearings on veterans charities it said spent too much on overhead. Lawmakers say they are considering requiring nonprofit groups to disclose to the public more details about how much they spend on overhead.

The public’s assumption that charities are wasting money on overhead is a problem for fund raisers, even for those groups that actually spend little on administrative expenses, says Ron Sellers, president of Ellison Research.

“People who believe nonprofits are spending too much on overhead will tend to make that assumption about any nonprofit they come across,” he said.

Young Donors

The study reflected general agreement among Americans about how much charities ought to spend. Most of those surveyed, 61 percent, believe charities should spend between 10 cents and 29 cents of every dollar they raise on overhead. Ninety percent agreed that charities should spend less than half of the money they bring in on overhead.

But respondents differed widely in their estimates of how much they think charities actually spend on salaries, computers, and other costs. Nearly one-quarter believe charities spend less than 20 cents of every dollar on their expenses — and almost as many think charities spend 60 cents or more.

Younger donors are more inclined to trust charities’ spending than older ones, according to the study: Seventy percent of those age 55 and older said charities spend too much on operating costs, compared with 64 percent of those 35 to 54 and just 44 percent of those under 35.

In addition, almost twice as many black people (20 percent) believe charities spend too little on overhead as do white people (10 percent) and Hispanic Americans (10 percent).

The study, which surveyed 1,007 adults in 50 states, had a margin of error of 3.1 percentage points.

A copy of the study is available online.