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Kevin F.

Kevin

How and why do so many nonprofits claim no fundraising expenses?

Marketing and Fundraising Professional for Nonprofits

Do these tend to be charities that rely too heavily on grants? After all, government and private funding agencies seldom support fundraising costs, so nonprofits are often tempted to hide these costs in program budgets.

Thousands of charities that raise at least $1-million claim they spend no money raising donations, according to <a href="http://www.knoxnews.com/news/2012/may/20/many-nonprofits-incorrectly-claim-no-expense-for/">Scripps Howard News Service</a>.

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  • May 22, 2012
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  • Brad C.

    Brad

    Brad C.

    President, African Christian College

    Nonprofits have been under pressure and watch to cut the "overhead" costs -- especially fundraising out of their annual reports, tax filings, and other financial reports.

    It has become standard to rate a nonprofit's effectiveness by the percentage that its money is split between program, administration, and fund raising. Program = good. Admin and fundraising = bad. This, of course, is not a useful tool for measuring effectiveness. Fortunately, there is a movement toward measuring outcomes instead.

    I do not think the article is limited to those who rely too heavily on grants, but is a common trend in the sector generally. In the article, it cites 48 Goodwills that reported no fund raising. Goodwills tend to have a diversity of funding streams, including earned revenue.

    Nonprofits have been taught to "hide" fund raising costs in program or administrative expenses as much as possible. Some take it a bit too far out of fear from the repercussions from donors and foundations.

    Hopefully the tide will soon change.

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