Connect with us

Economics

Donations: How Much of Your Dollar Is Actually Going to The Beneficiaries?

When you give your hard-earned dollars from your heart, how much of that love is going to benefit the people and cause you want to support?

 

Philanthropy is on the rise in Singapore. And that’s a good thing! Singapore takes a “Many Helping Hands” approach when it comes to the social service sector. Many charities are heavily reliant on donations and from individuals, government entities, charitable foundations or corporations to sustain their operations and continue to provide invaluable service to their beneficiaries.

Flag days are still commonplace, where young students guilt you into donating. There is also a rise in online platforms for donations, which mean your heartstrings can be pulled as you try to watch the latest videos on YouTube or stalk your crush on Facebook over a tub of Ben and Jerry’s.

This article focuses on monetary donations, setting aside donations in-kind and volunteering. While donating money to causes is laudable, but one needs to also be aware of how the money is going to be spent, and how much of it does go to doing good

Administrative Overhead and Cost of Generating Funds

For any organisation in Singapore, there are unavoidable costs of operating overheads (keeping the lights on and premises clean), paying staff salaries (social workers, programme personnel), training and development, as well as governance costs (e.g. legal and auditing fees). Money to keep the lights on, toilets clean

While these costs do not count as benefiting the clients that the charity serves directly, these expenses as a whole support the charity and are indispensable. As a donor, it would be good that you are aware of these costs and how effectively the organisation is using its funds. Such information can be found in annual reports and financial statements, which charities are obligated to file with the authorities  and make publicly available.

Professional Fundraisers

If you see well-dressed people who look like they should be at work standing at Shenton Way during office hours claiming to be “doing charity”, you should ask them if they are professional fundraisers. Some charities engage firms to handle their fundraising efforts and others have professional fundraisers on their payroll directly. Professional fundraisers are people whose jobs it is to solicit donations and get commitments of individuals and companies to donate. Interestingly, a search on job boards for fundraisers or “donor engagement” jobs show that these jobs pay quite well, with some organisations boasting “high commission”. Now, that’s dollars not going to the worthy cause that they use to get you to open your wallets. In fact, these people have more in common with salespeople than noble volunteers who contribute their time for worthy causes on top of their day jobs.

Online Donation Platforms

More charities are also turning to the Internet to raise funds for worthwhile causes. At Giving.sg, a fundraising portal for philanthropy, the number of charities registered on the site currently stands at 388.

Singapore-based charity crowdfunding platform GIVEasia has seen the number of local charities it serves surge ten-fold to more than 250 today, from 25 in 2010. The platform does not charge donors or fund recipients a transaction fee, although the use of credit or debit cards incurs a bank fee.

Crowdfunding platforms like Indiegogo do charge a platform fee (5% as of this writing) in addition to transaction fees that payment providers charge.

Be Informed Donors

Before contributing to a charity, you should not only research the organisation you are giving to, but also ensure the authenticity of the campaign purporting to be raising funds for the organisation. Are they volunteers? Does anyone take any commissions from this fundraising effort? For online campaigns, even if you are not donating any money, it is a good practice to verify before sharing with people on your social network. Telltale signs include inconsistencies and shady details.

If you are unsure or uncomfortable, feel free to ask for clarifications. There are many resources to help an informed donor. By doing so, you also help the charity improve how they communicate to members of the public and engage donors better. If you are able to, the best thing to do is to volunteer with that voluntary welfare organisation. By doing so, you would be able to see firsthand how the charity is run and the impact of the charity’s efforts on the ground.

Having said the above, as donors we want to make our donation to count. But we also learn to see beyond a narrow focus on accountability and see the greater social benefit that an organisation brings (or is trying to bring).

Ultimately, efficiency and effectiveness in the non-profit sector benefits from an informed giving community, which allows it to better address social issues. This is good for everyone.

 

Top Image

 

DollarsAndSense.sg is a website that aims to provide interesting, bite-sized financial articles which are relevant to the average Singaporean. Subscribe to our free e-newsletter to receive exclusive content not available on our website. Follow us as well on Instagram @DNSsingapore to get your daily dose of finance knowledge through photos.