How much of my Penn’s Way donation actually goes to support the charities I choose, and how much goes to overhead?
—Wants to Make Every Dollar Count
Dear Green Eyeshade,
Overhead is a necessary part of any operation. Charities call it the “administrative rate.”
The Penn’s Way staff tell me that the United Way / Donor Choice administrative rate is 10.2 percent. That means that 89.8 cents of every dollar you give to United Way agencies goes to the charities of your choice.
The Center for Responsible Funding does not take an administrative percentage from Penn’s Way contributions. CRF works with Penn on behalf of five umbrella organizations. All of your Penn’s Way contributions to CRF affiliates go directly to the charities, which then give CRF an agreed-upon amount at the end of the campaign.
All charitable organizations have to spend money to raise money. According to the National Center for Charitable Statistics, nonprofits average 26 percent of their total expenses on fundraising. The Better Business Bureau’s Wise Giving Alliance recommends that nonprofits devote no more than 35 percent of total expenses to fundraising.
Different means of fundraising offer different benefits. A special event might not net as much as a direct mail appeal, but it gives donors a chance to interact with the organization, which helps build loyalty.
Workplace campaigns like Penn’s Way are considered the cheapest way to raise money because they allow charities to reach large groups of people at one time. The convenience of payroll deduction allows contributors to stretch their charitable dollar further than if they made a one-time gift.
And since most charities have small financial staffs that would be overwhelmed by having to process numerous small donations, workplace campaigns let them devote more of your charitable dollar to the actual work they do by aggregating administrative costs and spreading them across a much larger base of funds.
Originally published on December 5, 2002