[joelrunyon]

But it's clear communication. People are missing that.

Small donors like to see their money go directly to projects + don't understand overall operating costs (on the whole).

Larger donors tend to see the overall operation and can fund that directly.

Most of the problems people have with the Red Cross are that 100% of the money doesn't go directly to the fund they donated to (which is fixed in this model).

This creates more goodwill and more trust, which brings in more donations. Net win for the charity. I don't see why more don't do this...

[SamBam]

But that model still can't be entirely correct. If you raise enough at your high-rollers gala to cover the 3% costs of processing $100,000 in credit card payments, and you receive $150,000 in payments, you're going to need to spend an additional $1500 to cover that. There's no way around it. And you can't say "well, these donations were covered, but these other ones weren't." How do you select which ones are covered? It's all fungible, and it's all going in the same pot.

It's simply more honest to say that everybody is donating into the pot, and that there's overhead on everyone's payments. (And almost all overhead costs, even "fixed" costs, tend to rise with the amount donated.) That's the truth of it, and trust should be earned by telling the truth. Donors should by now understand that.

As for Red Cross's problems, it's much more to do with the fact that they constantly bungle their mission, clashing directly with local aid workers and not getting aid to the people in need. The fact that 26% goes to marketing, much higher than most other charities, is just the icing on the cake (and can't just be solved by shoving piles of money in different pots and claiming that the high-rollers pay for the marketing).

[joelrunyon]

For charity water's accounts - they specifically take all public donations in one account + all admin costs in another.

https://www.charitywater.org/content/site/assets/files/2091/...

[SamBam]

But it's still just creative accounting. If your administrative costs are $1M and your program costs are $9M, you could either

1. Ask Joe BigBucks to donate $1M, put that in one account, and ask the public to donate $9M and put it in another, and tell the public "all your funds are going to projects," or

2. Ask Joe BigBucks to donate $1M, put that in your account, ask the public to donate $9M and put it in the same account, and take $1M out of the account for administration and $9M for projects. Now you tell everyone that 10% of their donations go to administration.

The only difference is what you tell people. You still wine-and-dine your high rollers to get them to donate $1M. You're still doing the exact same amount of fund raising. Your still spending the money on the exact same things.

I don't care that they're "audited separately" -- your administrative and program spending would also get audited if they were in one pot, like every other charity.

It's just creative accounting to make donors feel better. The "private donors" (aren't we all?) realize this, so they're happy to label their donations "administrative" to continue this charade. They get that $1M in that pot means $1M more to spend on programs, otherwise they wouldn't fund it.