The ambivalence of charitable financial stewardship

In this postmodern era of development, leading NGOs are being criticized for their fundraising and administration fees. Donors are progressively becoming skeptical and resistant to the concept of charity overhead costs; especially as it deals with the salaries of those employed. They are resistant to having a portion of their contributions allocated towards the pockets of CEOs, executives, field workers, and the like. Moreover, they‘re beginning to place their confidence in organizations where 100 per cent of the donation is sent directly to field programs. While I can’t blame donors for wanting to give to agencies who seemingly uphold the most ideal of financial stewardship practices, I would have to question the effectiveness of this approach.

One increasingly popular non-profit organization who delivers this promise of the “100% Model” is Charity: Water. Since its establishment in 2006, Charity: Water claims to have funded 13, 641 water projects in 22 countries, benefitting more over 4.6 billion people. With an annual revenue of roughly $27 million, Charity: Water’s income is no small feat. Though it may not be as extensive as larger, leading NGOs like CARE, The Red Cross, or World Vision, this is considerably impressive for an agency which doesn’t claim the overhead fees of its supporter base. Operating on a two-budget financial model, operational costs are instead covered by the generosity of private donors and corporate partners. According to their financial report, they ended 2013 with a total of 67 employees, and even while they grow, they continue to keep their 100 per cent promise.

Here is where the problem lies: accountability. The donations from private donors and corporate partners don’t seem to be accounted for. How will we know exactly how much money is attributed to staff salaries? Further, what if a portion of these same dollars could be used more effectively to fund projects overseas? This concept of private and corporate partners funding employee compensation seems to mask a great deal of ambiguity. For a while, Charity: Water’s donation slogan was, “$20 can provide clean and safe drinking water to one person for 20 years.” It’s difficult to prove that the technology Water: Charity uses can actually last 20 years. Achieving long-term sustainable solutions is much more complex. As boreholes require much effort to install, they are even more difficult to maintain. At this point, both the accountability and project sustainability of this charity comes into question.

When it comes to financial stewardship in NGOs, donors must learn that cutting administration fees does not equate to more aid. There’s a reason why charities like CARE and Word Vision – as aid organizations – have stood the tests of time, establishing their presence in more countries than most, while providing some of the most impactful methods of aid.

Executives and employees, although compensated, receive salaries that aren’t comparable with positions they might otherwise hold in a typical business industry. Due to the nature of the work, these agencies require employees who are highly skilled and qualified to perform many different functions within the organization. Like most people, employees have families, bills, and lives that require them to draw on a personal income for their labour. The extent and responsibility of the work also requires diligent, long-term commitment that can’t be obtained by volunteers – requiring highly educated and highly trained professionals. Simply put, stewardship may sometimes entail spending more money to make more money.

Development is multi-faceted. Its concept is complex; difficult to measure and even more difficult administer. I am in no way attempting to assassinate the endeavours of Charity: Water or other agencies with similar practices. I also recognize that donors are well-intentioned, and I respect their willingness to support what they truly believe contributes to long-standing change. Rather, I am simply urging donors to reconsider their scrutiny of charities that provide financial compensation to its employees. I urge them to re-examine the methods agencies are using to attain sustainable development solutions, and learn to identify the intangible benefits well before prejudgment.

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