A Canberra man says he has been bombarded with begging letters from two overseas aid agencies, which he says spend 65.5 cents in every dollar raised on fund-raising costs and administration.
However, the aid agencies say the letters are a very cost-effective way of raising money and the ratio of costs to total money raised is less than a quarter.
Gerard Sellars, of Griffith, said yesterday that he and his wife, Elizabeth, had been giving to overseas aid agencies for decades, but in recent years they got bombarded with “”begging letters”. He decided to take a tally.
“”I got nine letters in 12 months from Freedom from Hunger,” he said.
He collected nine in 12 months from Austcare from December 20, 1990, to November 14, 1991. This year there had been a further eight.
Care Australia, on the other hand, had sent out only six.
As a result of the letters he had asked for accounts to see how much was spent on administration and fund-raising.
He thought the Freedom from Hunger accounts were misleading. They had total revenue at $8.1 million, made up of $2.8 million private donation and the rest government grants. They had fund-raising of $1.5 million and administration $350,000. This gave a ratio of 24 per cent administration and fund-raising costs to total revenue. However, if those costs of $1.85 million were compared to with the private donations of $2.8 million, it meant 65.5 cents in every dollar raised went to administration and fund-raising costs.
The account extract provided by Austcare did not include the information he had sought. He had sought further information, but none had come.
He would now give only to local and national charities “”where you can see where the money goes,” with the exception of CARE Australia, “”Malcolm Fraser’s group”.
The two agencies and the Australian Council for Overseas Aid rejected Mr Sellars’s assertions.
The national director of Austcare, Eric Ellem, said it was unfair to exclude government grants from the total revenue base when working out the percentage that goes in administration and fund-raising.
His organisation specialised in refugee and emergency work. It called on government help from time to time.
“”The Government would not fund unless there was a proper structure and an ability to deliver the goods,” he said.
Austcare had about $7 million in revenue last year, $4 million from the public and $3 million from government.
“”We would not have got the $3 million without proper organisation and administration to deliver and without having raised the $4 million from the public in the first place,” he said. It was absurd to exclude it in working out cost ratios.
Direct mail was very effective. About 90 per cent of the $4 million came from direct mail and direct-mail costs were only $300,000. Each letter cost about 65 cents.
Of the $7 million, $1.4 million went in total operating expenses, or 20 per cent.
“”We are not game to live high on the hog; it destroys our credibility,” Mr Ellem said.
Russell Rollason, of the Australian Council for Overseas Aid, which is the co-ordinating body for 100 Australian non-government aid agencies, said the council had a code of ethics about disclosure of expenditure.
The taxation law provided every dollar receipted to provide donors with tax deductions had to be accounted for. It had to go overseas via a designated overseas account or to a very limited expenditure on administering the overseas account.
As to the bombardment of letters, he said it was cheaper and easier for a computer program to mail out a comprehensive list. Donors would stay on the list for at least a year after their donations. Agencies found it necessary to keep up requests if they were to maintain donations. Also, the mail contained valuable educational and awareness material.
“”No matter how much we raise, important as it is, that will not end poverty in the world,” he said. “”We need to change economic, trading and political systems. The best way to do that is through education.”
The executive director of Community Aid Abroad-Freedom from Hunger, Bob Debus, said Freedom from Hunger had amalgamated with Community Aid Abroad this year with the aim of keeping overheads down.
“”Seventy-six per cent of our total income in 1991-92 has gone to development projects overseas or development education in Australia,” he said.
The income was a total effort. The more money raised from the public the more money became available from the Government’s Australian International Development Assistance Bureau. The organisation needed to build up a scale of expertise to attract the government money which was used for the same purpose as the public money. The two could not be separated for the purposes of comparing costs against revenue.
Direct mail was one of the most cost-effective ways of raising money. Its costs were 20 per cent of that raised. And it provided the spin-off of an educational function with materials contained in the mail.