Tuesday, February 26, 2008

New Study Finds That Many Americans Say Charity Overhead Costs Are Too High

A recent story in the Chronicle of Philanthropy detailed a new study issued by Ellison Research, a for-profit research group based in Phoenix, Arizona.  In addition to being commissioned by clients to conduct market research, Ellison conducts its own research series on public opinions, perspectives, practices and problems.  It has conducted research on the clergy, people in the church, and now charities.  On February 13, 2008, Ellison released its latest study which explores public perceptions of how much money charities spend on overhead.  As the Chronicle story states, the study found that "[s]ixty-two percent of the public thinks that charities spend too much money on overhead costs such as fund raising and administration."   The article also contains other findings of the study but most significant is what conclusion flows from the study.  The president of Ellison Research is quoted in the article as saying that, "[p]eople who believe nonprofits are spending too much on overhead will tend to make that assumption about any nonprofit they come across."  He is further quoted as saying, that "[t]hose assumptions make it tough to raise money, even for charities that spend little on overhead, because people's beliefs influence their giving and people who assume charities aren't efficient are less likely to donate to new organizations."

In the comments that follow the article on the Chronicle's website, one person makes the observation that there appears to be a disconnect between the public's perception and the reality of the rising costs of doing business.  The day before the Chronicle ran this article on public perception of charity spending on overhead, the Chronicle ran an article announcing that nonprofits will pay higher postal rates in May.  I find this discussion particularly compelling in a time of recession when people can be expected to make fewer donations to nonprofits, and in a time when nonprofits are feeling the pressure to become more self-sufficient money-wise.



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