A Dishonest Approach to Soliciting Gifts

To the Editor:

Like most people, I often receive direct-mail solicitations from various organizations.

As a fund-raising professional, I frequently send out similar letters on behalf of the nonprofit for which I work, and therefore I carefully read the solicitations I receive at home from other nonprofits. Recently I received mailings from several unrelated nonprofits that used the same approach. Along with the request for a donation, they included variations of the same statement: “100 percent of your donation goes directly to support [needy children, or the blind, etc.],” thus implying that not a penny is spent on administrative and fund-raising costs.

It’s a nice thought — and obviously appealing to potential donors, since most people would prefer to have their dollars spent directly on a meal for the hungry or surgery for a child with cleft palate, rather than on “boring” things like staff salaries and office supplies.

But while it may not be illegal or unethical to make the above claim, the overall approach is fundamentally dishonest.

Every agency must have a budget for administrative and fund-raising expenses; without people to do these tasks, and without essentials such as office space and supplies, organizations couldn’t do their work.

In order for the organization’s claim that all of the donor’s funds will be spent on direct services, and none on “overhead,” to be true, these agencies would have to be staffed solely by volunteers; their office space and utilities cost-free; the paper and envelopes they used for the mailing donated, and printing and postage also somehow obtained free. That’s simply not the case.

It may be true that if the agency raises, say, $50,000 through one appeal, it could donate $50,000 to that particular cause; or its overhead costs could be underwritten by a specific donor. But this doesn’t change the total amount of money donated to the organization; it’s just taking money out of one pocket instead of another.

Grantmakers for Effective Organizations, a coalition of 300 grant-making organizations, in its recently published General Operating Support Action Guide, points out that underinvesting in salaries and other infrastructure costs generally reduces an organization’s effectiveness: “Overhead costs, including the costs of fund raising, are as real to an organization as the costs of activities directly associated with a project, and must come from somewhere. Thus, project support that does not pay its full proportion of overhead takes a ‘free ride’ on other funders’ support, and ultimately decreases the overall effectiveness of an organization. Nonprofits that spend too little on infrastructure have more limited effectiveness than those that spend more reasonably.”

When nonprofits claim that none of the funds collected will be spent on overhead, they do their supporters — both donors and those whom they serve — a disservice.

Rather than attempting to seduce donors into giving a few more dollars by making these less-than-technically-truthful assertions, organizations should seize the opportunity to educate donors about the need to support the infrastructures of organizations that do valuable work, and to help the public to recognize that in the nonprofit world, just as in the business world, administrative and fund-raising overhead is the necessary and unavoidable “cost of doing business.”

Reasonable and appropriate overhead expenses are the tools that enable agencies to accomplish their work. Donors deserve to know what these costs are.

Phyllis Nutkis
Assistant Grant Writer
The Ark
Chicago