Not any more

Rambling about Charity Overhead | The Uncultured Project

In Canada on January 25, 2011 at 12:18

Yes, this is a real ad campaign by KFC for Double Down sandwiches.

Let’s say some fast food restaurant is running a slick and savvy ad campaign that’s caught my attention. When I go to buy their food, do I complain that part of the price they are charging me is meant to cover part of the cost of their ad campaign?

What if I get a heart attack after eating all that fast food? Should I complain that part of the hospital bill goes to covering the doctor’s salary so he can earn enough to repay his student loans and justify spending all those years in med school?

As consumers, we will always be paying for expenses over and above the goods and services we directly benefit from. The same is true for charity: there are expenses over and above the help that any individual or community directly benefits from.

This is a no-brainer to everyone reading this. But I feel I need to state the obvious because what I’ve been saying about trackable donations and charity overhead has been misunderstood by aid bloggers who have stumbled across this project.

I’m not saying that overhead is bad. I’m not saying that overhead isn’t required. I’m not even saying that charities need to reduce overhead. What I am saying is that there is value in charities considering a different approach to covering overhead.

They should consider this because this matters to a lot of people.

It Matters to Donors

Most aid professionals assume donors don’t want to pay for overhead. This couldn’t be further from the truth. Rather, what many donors and potential donors are objecting to is the lack of control. And I don’t mean control over the poor.

Many donors hate how most charities are framing the conversation about global poverty through their advertising. Charities often portray the poor as objects we should pity. Donors don’t want their dollars used to fund more guilt trip messaging.

Screencap of charity TV ad. Black and white video? Check. Crying child? Check. Preachy voice explaining how only you can save them? Check and check.

Donors also want charities to treat them less like consumers and more like investors. And investors, unlike consumers, are allowed to have a say in how much of their money go towards overhead.

Although I think these are pretty damn good reasons in and of themselves, many aid bloggers have pointed out that it’s not about the donor. Donors, they argue, should be educated to give without requests, conditions, or restrictions.

Even if we agree with that premise, what I’m saying is still important because the only people who care more about this than donors are the recipients of aid.

It Matters to the Poor

You don’t have to take my word on this: ask Dildar Mahmud. He’s a District Manager for Save the Children USA in Bangladesh. He has over 20 years of experience in aid and development and makes a pretty convincing case.

Dildar Mahmud (left) is District Manager for Save the Children USA in Southern Bangladesh. He manages and oversees projects from USAID, The Global Fund, the Gates Foundation, and smaller partner charities.

As he explains it, major international charities are in a struggle to maintain their legitimacy among the poor on a near daily basis. The reason? The poor aren’t stupid and they can see how major charities are spending people’s donations.

For example, as Mr. Mahmud points out, what do you suppose villagers think when they see charities and NGOs driving staff around in SUVs? In many of the communities charities serve in, some villagers can’t even afford a pair of shoes.

SUVs like the one above are a mainstay in virtually every village I’ve been to in Bangladesh.

Similarly, what about the clothes that charity personnel have to wear? A button up office shirt and slacks may not seem extravagant, but it does stand out when everyone else in the village can only afford tattered lungis.

In some villages I’ve been to, the only people who could afford shirts were NGO officials. Don’t worry, I’m not thinking of collecting a million shirts to send to them.

If only because I’ve tried to do without them, I see the value in things like SUVs and doing aid work with a proper salary. But the fact remains that many villagers take issue with charities using donations for the poor to cover these costs.

Why The Poor Prefer No Overhead

Village mothers complain to me about specific INGOs and aid officials they have problems with. The first question I get asked when I go to a village is whether or not I represent an NGO. Being able to truthfully say “no” seems to give me an automatic & instant boost in trust. That’s speaks less about me and more about local attitudes towards NGOs/INGOs.

The fact of the matter is locals have been pulling each other out of poverty long before the first aid worker ever set foot in their country. Local methods of development are rooted in customs, culture, & family histories spanning centuries.

This is less about being Santa Claus and more about locals fostering 1-to-1 personal relationships with those in need. Because these relationships are based on personal accountability and reputation, this actually gives the balance of power to the poor.

If the poor are in any way dissatisfied with the conduct of the locals providing help, these locals stand to lose their personal reputation amongst the community. In this arrangement, the highest crime is to take a cut from funds meant for the poor.

With the advent of the NGO, the balance of power has shifted. NGOs and charities, unlike local individuals, can take a cut from donations as overhead. The poor, in turn, have to accept this reality or risk being branded as uncooperative beneficiaries.

As I’ve blogged about before, not only do the poor still prefer that charity be 1-on-1 and without cuts for overhead; but they also have an intense disdain and distrust of organizations that do. As they say “NGOs taka kai fellay” (“charities eat the cash”).

No Overhead Charities in Action

This isn’t an “us vs. them” scenario. Charities can be an invaluable part of a community’s development while still being respectful of local attitudes on overhead. This is because there are pre-existing charities embracing (or working towards) the no-overhead-from-public-donations model:

  • Charity: Water uses 100% of every public donation towards clean water projects (and not administrative or marketing overhead). They can do this because private donors have already covered their entire overhead.
  • Global Medic is a Canadian charity that has responded to every major international disaster in the past 5 years with clean water and medical support. Leveraging endowments and government support, every donation from the public goes to program costs. As they say: “we pride ourselves in being a no-overhead charity”.
  • Direct Relief has helped provide emergency medical relief after the Haiti earthquake and during the current Pakistan flooding. They leverage grants that cover their administrative overhead to ensure that 100% of public donations go towards their disaster relief operations.
  • Free the Children is one of Canada’s most well known charities. Craig Kielburger, it’s founder, created a social for-profit enterprise alongside this charity called Me to We. 50% of the profits of this enterprise go to Free the Children. Kielburger is using these funds to make Free the Children a zero overhead (from donations) charity.
  • The Catholic Church, believe it or not, has been a major charitable force in Bangladesh through the Holy Cross Congregation. The Holy Cross leverages general donations to the church to pay for its overhead and upkeep. This allows for those donating to help the poor to do so in a way where 100% of it goes to project costs. It’s been so effective that even World Vision has subcontracted and funded school construction projects through them.

The fact of the matter is every single day the no-overhead-from-public-donations model is being embraced by more and more charities. And the charities that have already embraced this model continue to grow and gain support from both donors and the poor.

My support of Charity: Water has been seen as a point of criticism for some aid bloggers.

Yet, despite this, aid bloggers have presented me with a no-win scenario when I dare talk about the value of no overhead donations and charities. Simply put: any model I put forward is either deemed “not scalable” or dismissed as just “bad aid”.

But the proof is in the pudding: Charity: Water has provided clean water to over a million people in under 4 years, Global Medic’s approach has been well received among it’s charity partners and the Canadian government, and Free the Children has been nominated multiple times for a Nobel Peace Prize (by Nobel Laureates – not the general public).

Most surprisingly, the Holy Cross Congregation has consistently maintained a high reputation in Bangladesh between both the Christian and Muslim populations. In a country where less than 1% of the population is Christian, that’s saying a lot. Remember, this is a region where Christian charities get their offices bombed.

I was hesitating writing anything about this since many aid bloggers didn’t want to hear me out.

About Aid Bloggers

I’m not an aid blogger & I’m definitely am an outsider to the aid blogger community. And, to be honest, aid bloggers have every right to be leery of outsiders. While overall donations remain the same, more anti-poverty projects keep popping up.

Some of these initiatives are just bad ideas and can do more harm than good. I understand that good intentions aren’t enough, but I would like to respectfully suggest that aid professionals don’t have a monopoly on development wisdom.

Leveraging local wisdom and know-how on how people should help the poor is why I started this project in Bangladesh (my parents’ homeland).

As I’ve said, locals have been helping locals long before the first aid worker ever set foot in their country. And locals will continue to help locals long after the last aid worker retires. So it behooves us to recognize there is legitimate local know-how, wisdom, and experience that exists outside of the “aid industry”.

It also must be said that this doesn’t have to be a zero-sum conversation. Charities can take overhead from donations and do amazing things and empower countless people. I don’t have to be wrong for what you are doing to be right. And vice versa.

I mention this because, as pointed out from within the aid blogger community, there is a propensity for criticism to get snarky. I have thick skin (literally & figuratively) but it’s my hope that, if we can’t see eye-to-eye, we can respectfully agree to disagree.

So do you think Charity’s should open up their books and show us exactly where our money is going to?

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