The ‘Overhead Myth’, transparency, and AfriKids

AfriKids Director, Sally Vivyan, won the 2010 Institute of Fundraising Gill Astarita Fundraiser of the Year Award. Here she talks about fundraising at AfriKids and the myths surrounding charity overheads…

 

A recent campaign in the States is calling for an end to the ‘overhead myth’ surrounding charity performance. Essentially it’s saying that it’s more important to look at the impact a charity has than what it costs to run itself. Well I think our first response to that is ‘hooray!’ and our second probably ‘at last!’ . Why? Well here are just some of the reasons:

 

It costs different amounts to run different types of charity

 

Every charity and every funder seem to classify overheads in a slightly different way. However you do it, it’s clear that it’s going to cost more to run a service delivery charity in an inner city than it is to run a small office for an international focused one like AfriKids. AfriKids’ biggest overhead costs come about because we’re based in central London and that’s an expensive place (albeit we have a very generously discounted rental agreement and have for most of our history been in free office space), especially when compared to rural Bolgatanga. Couldn’t we relocate to the rural hinterland you say? Well possibly yes, but it’s unlikely we’d have been able to do things like win Deutsche Bank’s first ever African Charity of the Year partnership and raise a record breaking £1m+, or that we’d currently be smashing Allen and Overy’s global charity partner fundraising target. We can trace both of these partnerships, and many more, directly to our presence in the city. And that presence and these partnerships are helping us move ever faster towards the point that we hand over to Ghana completely, closing that London office.

 

It encourages ‘smoke and mirrors’ accounting and a lack of transparency

 

For the last decade every charity has had to keep an eye on that magic pie chart; the one that shows what proportion of your costs go to overhead. Across the sector this has encouraged charities to slice up their core costs into ever more complex pieces and allocate them across programme budgets, the result of which is most people can’t work out what people are being paid or what we really spend on printing and teabags for the office! If funders were less focused on overhead it would be much easier to be transparent about our costs and explain why they are appropriate to our organisation and its stage of development.

 

There are things charities run by professionals can do that those run by volunteers generally can’t

 

This isn’t a universal truth, some charities are run by exceptional volunteers, but that does lean the sector towards more privileged individuals who can give time for free. There are over 100,000 charities in the UK and we are needed more and more in current financial circumstances. It’s vital that the sector can remain professional and drive up standards and efficiency. Ingraining a belief that we have to apologise for every penny spent on running ourselves and the subsequent daily struggle to raise core costs is not going to help this.

 

So what do we do at AfriKids to ensure that our overheads and core costs are reasonable, proportional and rational for our stage of development? Well one thing we do is we benchmark and this May saw the first ‘Chatham House rules’ HR cost bench-marking session for international development charities initiated by AfriKids and facilitated by the Venture Partnership Foundation. We’ve produced an anonymous report on this workshop which looked at staff salaries and benefits and we’d be happy to share it with you so if you feel it could be of interest, please get in touch.  You can also read some of the frequently asked questions about AfriKids’ approach to fundraising and measuring quality here.

 

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