Before the summer hiatus, I set the May monthly challenge to give selflessly. Little did I know that after that month, I would be pretty despondent with the whole idea of giving to major charitable organisations. Read on to find out why…
Listening back to the May monthly challenge podcast, the exact challenge for May is:
I wasn’t sure what mine should have been, but I wasn’t sure exactly what my charitable act should be.
I listed a few ways which people give to charity which I had concerns about, such as giving to the homeless or giving to people doing an event with “free charity entry” which other people pay for.
Another concern of mine which I mentioned in the podcast was a fear that giving to large corporations (Oxfam, Unicef, etc) didn’t give me transparency of where my money would go.
My fear was that the money would go towards salaries, overheads, marketing, etc. Unfortunately, my fears were certainly realised in the month.
Giving selflessly – How Did I Get On?
First of all, thank you all for your great ideas on charitable giving. A few people got in touch via email with some fantastic suggestions.
Unfortunately, I didn’t find time to act on these in the month of May (too much wedding preparation got in the way). However, I did manage one act of “giving selflessly”.
I was approached in the street by a girl with an “Oxfam bucket” who was raising money to provide water and sanitation to those effected by the Nepalese Earthquake. This seemed like a great cause, and so I reached to my pocket to drop £5 or £10 into the bucket.
It turned out that the bucket was actually only a prop and that to donate, I would need to text a specific number, which would automatically give them £5 to the appeal.
I text immediately and received a thank you reply for my donation. I left happy that I had done a little to help and that I could at least nominally tick off the May challenge.
Charity Doesn’t End With A Donation
Upon returning home that same afternoon, I received a phone call. It was from a company which worked for Oxfam in trying to obtain donations on their behalf. After a 5 minute introduction from the nice lady on the other end, I informed her that I didn’t have time that afternoon to speak, but she could call back another time.
I received a call the following day. I informed the gentlemen that I was happy with the £5 I had given, and I would probably donate more to similar appeals in the future, but when I was ready to.
He told me of all the advantages to Oxfam of me signing up via direct debit to give £10 per month. I repeatly informed this gentlemen that I would not be doing so and that I would give in the future when I was moved to do so.
Despite my clear message that I was definitely not going to sign up to the direct debit scheme, the gentlemen continued for 45 whole minutes, explaining all the appeals Oxfam were currently working on and encouraging me further to give via direct debit. He did not succeed.
However, before hanging up he said something extremely interesting. He informed me that the call was made by Private Company X (I forget the name) on behalf of Oxfam and that Oxfam had paid this company a sum of around £130,000 (I forget the exact figure) to provide the service.
Where Did My £5 Go? The Street Fundraiser
In the intro, I mentioned that I was worried that I was giving to a large charity because my money wouldn’t actually help the people it was supposed to. So, I decided to try and break down where my £5 charitable donation actually went.
In chronological order, my first contact was with the nice girl on the street.
In my hometown of Newcastle, the main shopping street (Northumberland Street) probably has anywhere between 15 and 30 street fundraisers from major charitable organisations. This always seemed like of people giving up their time to be scowled at by passers-by who are just trying to grab a sandwich in town and get back to their desks.
I ask myself: was the nice girl from Oxfam being paid or was she a volunteer?
“Street fundraising consists of various ways of asking for donations on behalf of a charity. Those asking for donations may be paid employees of the charity (or more commonly a private contractor working on behalf of the charity), or they may be volunteers.”
An article from 2002 from the BBC website interviews one street fundraiser who says:
“Then there are the people who have a problem with the fact that we get paid, which is unreasonable because this is a full-time job. All charities set aside part of their budget for fundraising, and they have contracts with agencies like mine to get new donors.
Despite what people think, we don’t get a commission. I don’t think it’s ethical to pay fundraisers on that basis. I started on £8 an hour and am now on £10.”
Oh dear – I thought that this girl was giving up her time to help those poor people affected by the earthquake. A search on apply4u.co.uk shows me that I can earn a salary of £8 – £12 per hour with incentives and holiday pay for being a street fundraiser:
So, let’s say that she was paid £10 per hour. From first flag down of “excuse me sir” to the last “thank you for your support” was probably around 15 minutes. Pro-rata, this means she was paid around £2.50 for getting me to pledge £5 (her request and chosen amount, not mine)!
Street fundraiser – £2.50
Where Did My £5 Go? Street Fundraiser Overheads
This is not going to be a huge cost, but that girl didn’t just find herself on the street with a bucket asking for my donation.
The recruitment agency would have been paid a fee. She was wearing Oxfam clothing and advertisement. She had the bucket. I imagine that she had a co-ordinator, superviser or manager to decide where she stands. She probably was trained by someone. There would be internal managers, accountants and all other types of position related to her being on the main street in Newcastle flagging me down.
Continuing up the chain, I guess you even have to attribute some of the CEOs annual salary and bonus to me. And the advertising budget. I probably only stopped because I saw and trusted the name Oxfam. I wouldn’t have stopped for “Otterthirst”.
How much should I attribute to that? No idea. In total, maybe £0.30 doesn’t seem crazy? Let me know if you think it does…
Street fundraiser overheads – £0.30
Where Did My £5 Go? Follow Up Calls
So, a private company working on behalf of Oxfam called me twice, in total for about an hour. Oxfam pay this private company, and we can assume that the private company at least break even on the deal.
Therefore, Oxfam would have had to pay for the callers salary (let’s be prudent and assume minimum wage), plus costs of systems, calls, supervisors, managers, cups of tea, etc for this private company.
I think that I’ll hugely underestimate the cost if I say that Oxfam pays 2 x minimum wage on the contract for every hour that a caller spends with a prospective “customer”.
Therefore, we’ll estimate the cost at 2 x £6.50 (2014 minimum wage).
Follow up calls – £13.00
Where Did My £5 Go – Conclusion
Down the pan. well, more accurately, you have to say that my £5 (and a whole lot more) went to paying salaries of workers in the UK.
Now, I don’t mind helping the UK economy grow, but when I try to “give selflessly” to the people in desperate need after a natural disaster, I’m not all that happy that my money simply goes to paying peoples’ wages here in the UK.
Based on my above assumptions (and I know that I’ve underestimated and omitted certain costs) my interaction with Oxfam cost them around £16.
Overall estimated cost: £16
I don’t know about you, but this really discourages me to give to large charities in the future. Next time, my “giving” will be much closer to home where I know I can see the benefit of my time/money (and not just in paying UK salaries).
However, please let me know if you took part in the May monthly challenge to give selflessly and if you had a better experience than me!
Next Monthly Challenge – August
Check back in the last week of July for the August challenge.
Based on the feedback from the last monthly results, I’m going to work more on these monthly challenges and stop the podcast for the time being.
August will include the challenge itself, but also a results round up at the end of the month where individuals can showcase their own challenge for the month in an attempt to improve accountability in these monthly goals.
Previous Monthly Challenges
Here are some links where you can catch up on previous monthly challenges:
February – Earn some form of side income: UserTesting.com
March – Try something new towards self-improvement: Podcasts @ 1.5x speed
April – Learn something new: Learn Colemak
If you need proof of the lasting impact of the monthly challenge (it takes 21 days to form a habit), you may want to know that I still use usertesting to earn side income, I am currently typing this using Colemak and at the same time I’m listening to the latest Tim Ferriss podcast at 1.5x speed. Lovely.
Very interesting article.
However you have to look at the lifetime value of the donation.
Say the average direct debit is £10 a month and they stay donating for seven years that would equate to a total of £840. This means they could experience a multitude of failed upselling attempts and still end up with a positive ROI.
I.E. If it costs them £16 to reach the upselling point and one in 20 convert they have spent £320 but generated £845 (£840 plus £5 original donation). That’s a pretty sweet ROI!
I actually spent a day working as a door-to-door salesman that tried to get people to sign up to a $30 monthly donation to amnesty international. We didn’t get a salary, but for every sign up we got, we got a bonus of around $30.
This reminds me a little of a book I read called ‘Influence’ apparently if you donate a small initial amount you’re much likely to be willing to give larger sums in the future.
Many people do seem to have an issue with their full donation not being directly given in aid but as you mentioned at every step in the process costs are experienced and if they can spend £16 to make £320 the total amount they get to give is massively increased.
Sam
Great points Sam and something that I came across when researching street fundraising when reading the article. It just doesn’t feel that morally brilliant that someone in the street asks for a £5 donation to a specific charity when the reality is that they are using that £5 and another £11 of their own costs in order to get my contact details.
If they were truthful however, and said “would you give £5” to Oxfam so we can get your details and try to prize £320 a year out of you, I’m sure even less people would stop and talk to the bucket wielders in the street.
I know that it’s effective (because otherwise they wouldn’t do it), and that charities need to maximise their revenues in order to help their target audience and this is the way they do it. But, it still just doesn’t feel right for me…
I shouldn’t laugh, but I’d kinda like to see people’s reactions if they said exactly that! Haha!
I’m currently paying university tuition fees for a young student in Cambodia via New Hope, part of the deal is she also studies English and computing there. Of course they have admin fees ect as well but at least this way I know the majority of my money (if not all in this case) is of direct benefit.
I think one of the issues you’ll come across is many charities use the smaller donations as spring boards for upsales; which means small donations often have a large percentage used up as admin/marketing ect. However as your donation increases a greater percentage would be given in direct aid.
Thanks for the thought provoking article!
Sam
Looks like it’s all types of charities that use such tactics to try to extract money out of well-wishers – I was saddened to read about that poor poppy seller who committed suicide as she was hounded by countless charities asking her for donations.
I’m actually less likely to donate to a charity if they chase me up afterwards by a call/text/email. I prefer to donate anonymously where I can.
My donations in May were to the UK based Magic Breakfast (to feed hungry kids!) and to Deki (http://www.deki.org.uk/), which is actually a charity ‘loan’.
I haven’t heard a peep from either apart from a newsletter because I hadn’t unsubscribed, so I’ll be donating to them again.
Yeah – that was a horrible situation Weenie.
Even worse, and as highlighted by Private Eye, was that the main concern of her family was the gross intrusion by the charities into this elderly lady’s affairs. It was a horrible irony then that their family also had to complain to the press commissioner due to the “gross intrusion” into their lives by the media reporting on this story…!
Hey Graham,
Really good post man! Completely agree with the skepticism on the charity there, from next year I’m going to increase my giving 2% per year until I’m giving away 10% of net income and finding one where a whole bunch of money doesn’t go to admin costs can be a bit of a challenge
I’ve often thought I’d love to create one, a charity, with others where there are no admin or minimal admin costs due to the people I’d be forming it with having businesses/passive incomes 🙂
Maybe a bit Utopian but I’m connecting with people like yourself and keen to get it started!
Btw good job on the Tim Ferris podcast, how good is it?
Thanks Jef. It’s a good idea and an argument that I am REALLY struggling to come down on any one side.
For private company X to maximise revenues for shareholders they pay the CEO a monster salary because he/she justifies such a wage in the extra profitability of the business.
Therefore, for a charity, it is not unreasonable that they should pay high wages in order to maximise profits for their shareholders (the people who are helped by the charity).
Dan Pallotta discusses this in detail in his TED talk. I would be interested to hear what you think:
Wow, that’s a completely different perspective looks like Dan has a very well thought out and research discussion/argument there..
He’s very much right on there being a lack of incentive with compensation, ad/marketing, taking risk to innovate etc.. I suppose my thoughts/inclination is to look at a crowdfunding/sourcing where people donate their time outside of their regular profit making/income pursuits and getting the people who are afflicted by misfortune/disadvantage involved in the “solution” if possible..
This of course assumes that there is then enough time, effort and interest of people however still not convinced that admin costs or paying salaries to people is the way to go, although in the absence of a better model it’s what we currently have at the moment.. I feel it’ll be hopefully people like myself who can build an Adam Braun, Pencils of promise type model where assumably taking a salary isn’t required or even something like the giving pledge, haven’t really researched too much into either to be honest are seen as the way forward..
Interested in your thoughts but cool video there :)!
Not sure there’s a perfect answer however like most things accepting the status quo is rarely the “best” solution