Monday, May 13, 2013

Charity Clothing Bins & 'The Agency Myth'

Full disclosure: I own a fundraising agency that charges a fee to carry out various services for various charities. But I acknowledge there are bad agencies and good agencies. There are agencies and suppliers that take the piss and there are agencies and suppliers that offer charities real value for money and can run an aspect of a charity's fundraising cheaper and better than the charity could do themselves.

This isn't about defending agencies, but it is about clarifying a misleading statement that seems to worm its way in to any report on any form of fundraising.: The majority of the revenue goes to the agency, not the charity.

In most cases this will be true, and if you don't really think too much about its meaning it can be shocking and disappointing. But it's misleading.

Take the recent coverage of charity bins: One article claimed that a clothes bank can generate €7,000 in a year, but the charity only received €150 in the year. This implies the private company running the clothes banks gets a whopping €6,850 or 98% of the revenue.

But what it doesn't talk about is costs. The costs in this example fall entirely on the private company running the bins - the cost of insurance, transport, wages, sorting, rent of space, waste disposal, tax, PRSI, etc. It's important to know the costs before a conclusion is made. If it costs €1,000 per year to maintain a clothes bank, well that seems a bit unfair. But what if it costs €6,800 per year to run a clothes bank? The company comes away with €50, the charity comes away with €150,

If the charity decided to bring the running of that clothes bin in-house they wouldn't be €6,850 per year better off. They would be €6,850 minus their new-found costs better off. They'd have to take on all the costs of running the risk.

Here are some interesting figures:
  • Eco-environmental (a private clothing bin company) recorded €30,000 profit in 2011 and a €23,000 loss in 2010. Average €3,500 profit.
  • ISPCC received about €76,000 per year from them (according to the Irish Times).

How many private companies do you know that donate 96% of their profit to charity?

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