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I have heard claims from several people in relation to the occasional donation my wife or I make: that some charities have so much waste in their organization, or use so much money to market their charity work in order to get donations, that only x% of the donated money goes to the advertised cause, where x% varies from 10% to 50%.

I thought I might get some good results by Googling, but wasn't too successful: I seem to encounter specific numbers only in uncited sources, like this one which is where I got the UNICEF/14% claim from.

Only pennies from the actual donations go to the UNICEF cause (less than $0.14 per dollar of income)

On the one hand, a charity might need to pay their employees at least something, but on the other hand requiring lots of employees to do the same work as another charity can do with a third of the cost is certainly a waste of the donated money.

Have there been proper studies of how much of the money donated to UNICEF in particular (since it is claimed to be the worst offender) is used wastefully, in the sense that the same charity work could actually be done without spending that money?

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What are the motivations of the people telling you this lie that is so simple to disprove. I don't understand why people want to disparage organisations with absolutely no evidence at all, especailly organisations such as unicef which has the express purpose of help disadvantaged childrem –  NimChimpsky Jul 16 '12 at 8:37
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Anecdote: A wealthy friend-of-a-friend in the U.S. revealed the secret to his riches during an alcohol-induced moment of weakness: He placed boxes in fast-food chains that read "A portion of proceeds goes to XYZ charity." He donated 10% of proceeds to the named charity. This was in the U.S., and I don't have documented evidence of this claim, but if this sort of thing is legal in the UK, it might be that donations through fast-food donation boxes have similarly low returns to the charitable organization. Moral of the story: Give your money directly to the organization you wish to support? –  Flimzy Jul 16 '12 at 15:21
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For future reference, Charity Navigator is a great site for charity research. As you can see on the UNICEF page, they include information about accountability and transparency, as well as information on how much money actually goes to services. –  user7864 Jul 16 '12 at 15:29
    
UNICEF does lots of things with their funding that distinctly are not helpful towards "disadvantaged children" - though the 14% seems mighty low to me –  warren Jan 31 at 19:37
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2 Answers

up vote 38 down vote accepted

This is not the case.

All charities in the United Kingdom (excluding Scotland) are under the remit of the Charity Commission. As part of a charities registration, they are required to submit annual financial returns to the regulator, which in the case of large charities such as Unicef UK ("The United Kingdom Committee for Unicef", Charity Number 1072612) are made public for transparency.

2010

Having looked up the records for Unicef, in summary for the year 2010 (there is some delay) Unicef received £81,312,000 and spent £81,246,000.

Of the £81.25M that they spent, £63.17M was classified as charitable spending. This equates to 78% of spending reaching charitable causes. Of the remainder, only 22% was spent on further fundraising and governance whilst <1% was retained for future use.


2012

To illustrate that this trend is continuing, the spending percentages for 2012 recorded 67.4% on charitable spending:

Charitable spending of UNICEF 2012 - Data from UK Charities Commission

Source of data for 2012


What counts as charitable spending?

The definition of this charitable spending that the Charity Commission provide (this help page) indicates that this figure only includes:

  • Costs incurred by the charity in supplying goods or services to meet the needs of its beneficiaries.
  • Grants made to meet the needs of the charity’s beneficiaries.

Therefore costs to simply raise awareness would be counted as "Generating voluntary income":

  • Costs incurred in encouraging other parties to make grants, gifts or legacies to the charity (e.g. mailshots, collection costs, assembling funding applications).

Meaning that the figure quoted above seem accurate - 78% of the spending is directly helping people.

As you mentioned employees, it is worth mentioning that Unicef UK has 200 paid employees, the remainder being volunteers.

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Does "rising awareness" count as "charitable cause"? AFAIK, that was for example the issue with Bono's ONE "charity", which was spending less than 1% on helping the poor, while spent most of the money on "rising awareness about poverty" and self-promotion. –  vartec Jul 16 '12 at 14:33
    
@vartec I updated my answer to reflect this, in summary no I don't think it is included. –  Rory Jul 16 '12 at 14:56
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I know of UNICEF pilots who fly back and forth around Africa with next to no one on board to maintain their income requirements for the next fiscal year. These flights are classified as aid. So just because something is called aid, doesn't mean it's helping people. –  Coomie Aug 7 '13 at 8:45
    
@vartec One doesn't pretend to spend their money on charity. –  Pieter B Oct 31 '13 at 14:38
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Presumably 'costs incurred' includes salaries paid to employees? –  Rob P. Nov 1 '13 at 0:17
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No this allegation is not true.

Charities are subject to strict auditing requirements, and UNICEF is no different. i'm going to point you at the report of Canadian UNICEF because I'm more familiar with it it. It says:

  • 4% of your donation goes on administration
  • 20% of your donation is used for fundraising

That means 76% goes to the actual programs. That's a pretty good ratio.

The Red cross is not quite as good: 16% administrative and 30% fundraising leaves 55% spent on programs. For World Vision (which your example singles out for special criticism) it is 5% and 14%, leaving 81% for programs.

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Thank you. I hate to choose between two equally good answers to mark as accepted... –  romkyns Jul 16 '12 at 9:46
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No problem. Rory's answer was more complete than mine. I'd probably vote for him myself. –  DJClayworth Jul 16 '12 at 13:13
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