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.
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.