Hard News by Russell Brown

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Hard News: Where your money goes

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  • Ross Mason,

    I knew Malcolm Beattie from my school surf days at Port Waikato. The article is right. he got things done. he called a spade an effing shovel and he moved things to make things happen. There was no denying that he was passionate about rescue that is for sure.

    But the crux of the whole shinnannigans was how on earth have we allowed organisations such as the rescue helicopter service(s) around the country to have to beg for funds to keep going?

    I agree that these services should be available throughout the country and yes, there have been operators who have pushed the boundaries to get themselves into the ACC handout. But a national servicee (aka Fire Service) would a useful addition to the country surely.

    The issue of the cut from the charity funds for "non-charity" purposes needs clarifying and more and more we are seeing the creaming of funds.

    The nasty bit is, would charities even get the amount they actually get to spend "in the right place" without the marketing? THAT is the balancing question and I suspect that the marketers themselves probably do the convincing on that one.

    Upper Hutt • Since Jun 2007 • 1502 posts Report Reply

  • Tim McKenzie,

    qualms about contributing to a charity that was doing what should properly be done by the state in a civilised country

    If people are voluntarily helping each other out, why should the government stop them, by forcing people to help each other out instead?

    There might be arguments to be had about the relative quality of government and voluntary welfare. And I'm not arguing that the government should suddenly abolish the welfare system, expecting the voluntary sector to magically instantly take up the slack. But, all other things being equal, I prefer to voluntarily help people out, instead of getting the government to force everyone else to help them out.

    Lower Hutt • Since Apr 2007 • 107 posts Report Reply

  • Rogan Polkinghorne,

    I can't help but wonder...the Big Night In can't have been cheap to execute...wouldn't it have made more cents (see what I did there?) to just donate the money they spent running the thing instead of passing off a 23 hour ad as fundraising?

    A-town • Since Nov 2006 • 105 posts Report Reply

  • Russell Brown,

    The issue of the cut from the charity funds for "non-charity" purposes needs clarifying and more and more we are seeing the creaming of funds.

    Yes. I think this is more of a problem with the charitable sector in general than anything else.

    Auckland • Since Nov 2006 • 19019 posts Report Reply

  • Matthew Poole,

    But a national servicee (aka Fire Service) would a useful addition to the country surely.

    It's hard enough to deal with the medical emergency calls they have now without making NZFS the ambulance provider to the nation. Remember that about 85% of fire fighters in NZ are volunteers, in the traditional sense of the word, ie: they get paid not a skerrick for their efforts and they subsequently must interrupt paid employment to respond to call-outs. Medical co-response is stretching the good-will of a lot of employers to the very limits, and at some point things will snap.

    If the Fire Service were to be made the national ambulance provider, there would have to be very clear lines drawn around medical vs fire/rescue. The criteria for having paid medical response staff would have to be vastly different to the criteria for having paid fire/rescue staff - it costs roughly a million dollars a year to keep up a single-appliance station with 24x7 career manning, and consequently very few communities can justify them. Even a "Yellow Watch" working 0700-1700 Monday-Friday comes in at over a quarter-mil. It sounds really easy to make NZFS the ambulance provider for all emergency medical services, but the models overseas all predicate on fully career fire services or fully volunteer. They don't have a mix because the NZ model of a fully national service is unique. That means we'd have to figure it out for ourselves, and when there're lives at stake that's a big risk.

    The pit from whence crawl… • Since Mar 2007 • 3925 posts Report Reply

  • Russell Brown,

    If people are voluntarily helping each other out, why should the government stop them, by forcing people to help each other out instead?

    I don't personally object to the role of charities, at all. I'm involved in a charitable event later this month myself. But surely you can see that there's a problem here with where the money actually goes?

    Auckland • Since Nov 2006 • 19019 posts Report Reply

  • Gareth Ward,

    What is an acceptable ratio then? It seems a bit rough to make claim that their's is "wrong" without defining what is realistically possible.

    18% looks low, but maybe that spending on PR, marketing, and events gives you enough awareness that the total amount in the end is much higher - it wouldn't be easy to raise $350k without any level of awareness for example?

    Certainly agree with the suggestion to make those things visible though, so we can begin to judge what is realistic.

    Auckland, NZ • Since Mar 2007 • 1722 posts Report Reply

  • Russell Brown,

    18% looks low, but maybe that spending on PR, marketing, and events gives you enough awareness that the total amount in the end is much higher - it wouldn't be easy to raise $350k without any level of awareness for example?

    I wonder if that's the problem. If your operating expenses are 80% of revenue, and such a large chunk of that goes in marketing, advertising and PR aimed at bringing in the revenue in in the first place ... isn't the model broken?

    Auckland • Since Nov 2006 • 19019 posts Report Reply

  • Tony Milne,

    This post is very timely. The Press has an editorial today on Pokie Trusts and calls for reform. There has been an ongoing issue these past two weeks with Eureka Trust. The Problem Gambling Foundation (PGF) threatened to take Eureka to the high court over their donations to horse racing stakes (in breach of their Trust Deed - which they were informed about 18 months ago).

    Horse racing is an authorised purpose in the Gambling Act, but Eureka set themselves up as a Charitable Trust in 2003 meaning they can't donate to horse racing. They have been donating around $1 million each year of the $5 million they distribute.

    Eureka conceded to the demands of The Problem Gambling Foundation (to stop donations to horse racing) so PGF didn't pursue legal action.

    Then later in the week Eureka announced they would stop all donations to sport (even though the legal opinion is that grassroots sport is a charitable purpose). Sporting organisations are rightfully upset that Eureka has changed their position of a week ago when they said they would stop donations to horse racing but continue to fund sport.

    Pokie Trusts also cream off a lot of money in admin (around $150 million for the Trust administration and $150 million for the pubs). Seems like a lot to distribute around $300 million.

    And as you have mentioned in your piece, there is too much potential for crime and corruption in how pokie trusts operate.

    Pokie Trusts are not fair, not efficient, and not transparent. It's time for Central Government to review whether a more streamlined and transparent system is needed.

    NB: These are not necessarily the views of PGF, who I work for!

    Christchurch • Since Nov 2006 • 2 posts Report Reply

  • Russell Brown,

    Looks like we could do with a local equivalent of:

    Charity Navigator

    Auckland • Since Nov 2006 • 19019 posts Report Reply

  • Geoff Lealand,

    It is a shonky business. I now make a point of asking, when I get yet another call raising money for a charity, "So, how much of my donation will go directly to the charity?". The explanation I recently heard was that the 'overheads' are high for these fund-raising companies. That is absolute tosh--to hire a bunch of poorly paid, under-trained teenagers to ring you up in the middle of your tea?

    Screen & Media Studies, U… • Since Oct 2007 • 2333 posts Report Reply

  • Kyle Matthews,

    What is an acceptable ratio then? It seems a bit rough to make claim that their's is "wrong" without defining what is realistically possible.

    That's shockingly low.

    As a comparison, Pub Charity last year returned about 40% of its income back to the community. But about another 25% went to problem gambling, and other 22% on rentals to get the gambling machines in the site in the first place. Administration was 5% of their income.

    They no doubt get some benefits from economy of scale, but returning less than 25% to the actual purpose of the donation is terrible.

    Since Nov 2006 • 6221 posts Report Reply

  • Craig Ranapia,

    In the discussion here, some readers expressed qualms about contributing to a charity that was doing what should properly be done by the state in a civilised country.

    In a "civilised country", I personally think it would be damn nice if no school ever had to fund raise for anything, Women's Refuge could suspend next year's appeal because it wasn't necessary, and the hospice/palliative care sector was fully (and generously) funded by the government. But, to be fair, I have a funny feeling you could line up a string of past and present health, education and welfare ministers who would tell you that they couldn't secure enough funding for every worthwhile causes.

    North Shore, Auckland • Since Nov 2006 • 12052 posts Report Reply

  • Rob Stowell,

    Quite an achievement from the Charitable sector: they've made the IRD- and associated bureaucratic Govt departments- look good, and relatively efficient.

    Whakaraupo • Since Nov 2006 • 1590 posts Report Reply

  • Jose Barbosa,

    Epilepsy NZ managed to lose 75 per cent of its fund-raising to a telemarketing company. Isn't that like handing over money to Satan?

    http://www.nzherald.co.nz/social-issues/news/article.cfm?c_id=87&objectid=10586637

    Auckland • Since Nov 2006 • 64 posts Report Reply

  • Steve Barnes,

    If I were to price a job, of almost any kind, as 25% wages 25% expenses/materials and 50% profit I would consider it "Skimming" So, surely an 80/20 split is not outrageous considering the "product" is just the feel good factor of giving?.
    If I wanted to give $50 to a starving family in Africa and guarantee the family got 100% of my donation, I would have to fly there and give it to them in person. The airfare alone would cost...
    Just a thought.

    The wireless north ;-) • Since Dec 2006 • 4947 posts Report Reply

  • Russell Brown,

    Here's Oxfam New Zealand's breakdown of costs.

    Four cents in the dollar on admin, 18 cents on marketing and cost of collection, 78 cents directly to programmes.

    That's a bit better, isn't it?

    Auckland • Since Nov 2006 • 19019 posts Report Reply

  • Gareth Ward,

    I wonder if that's the problem. If your operating expenses are 80% of revenue, and such a large chunk of that goes in marketing, advertising and PR aimed at bringing in the revenue in in the first place ... isn't the model broken?

    But the spend is to GET the revenue in this case - not the other way around.

    As has been pointed out now, the return they're getting does seem comparatively low to other charities so perhaps they are overdoing the PR spend. To continue the Devil's Advocate though, to get the higher absolute amounts, you may have to accept a lower final flow through.

    I'll put it this way - if they hadn't spent $400k on ads/PR/events, would they still have raised $1.95m? I'd say almost certainly no. The question is how much lower - what's the marginal dollar spent on advertising getting you back in revenue.

    Auckland, NZ • Since Mar 2007 • 1722 posts Report Reply

  • Hilary Stace,

    Perhaps another measure would be the volunteer hours v paid hours. I've been involved in one particular organisation for many years and most of the organisation is made up of volunteers who act as committee members, board members, help with activities etc. For many volunteers these can become significant commitments.

    However, to be more effective - to organise activities, answer phones, provide that front line help etc - you really need paid staff. Most employees of charities are on minimum wages or not much more as these salaries have to be fundraised for, as well as the office space etc. So many organisations are employing professional fundraisers as a necessity in the crowded market.

    But to get the shrinking charity money you need to promote your organisation (your brand). Kids Can spent a lot on marketing but it was very successful to the extent of getting a dedicated Telethon and nationwide name recognition. So in marketing terms it can be seen as a real success.

    I would love to go back to a grants system whereby the government worked in partnership with trusted organisations to provide services. (The last govt's Pathways to Partnership program which gave funding to organisations to work together was the start of this - but the new Govt has cut it).

    But until we do charities have to work in the competitive capitalist system.

    Wgtn • Since Jun 2008 • 2131 posts Report Reply

  • Idiot Savant,

    At the least, as PA reader Dave Nicholas suggested by email, the Charities Commission could usefully do the following:

    Sounds like a member's bill right there.

    Alternatively, the register is publicly searchable, and so it could be done privately. But it shouldn't have to be.

    Palmerston North • Since Nov 2006 • 1667 posts Report Reply

  • Gareth Ward,

    Perhaps the Govt's best play would be providing a centralised, free source to market charities. www.charities.nz or similar with a big billboard, TV etc campaign behind it.
    Then let people come to a central source and choose which charity they want to give to - solves the mass duplication of competitive media spend.

    Combine that with the ratio info from the Charities Commission and you have an incentive for charities to minimise their ad spend and use the central resource to still get the message out.

    Auckland, NZ • Since Mar 2007 • 1722 posts Report Reply

  • Paul Litterick,

    Has anybody identified any need for the raincoats and shoes that KidsCan provides? It looks to me like another opportunity for Adidas (which supplies the branded coats) to obtain yet more free publicity.

    There is a big difference between charities like Oxfam which are committed to addressing broad issues of poverty and those like KidsCan which have rather limited and (in my less-than-humble opinion) rather simplistic aims: give them coats and shoes and self-respect. Poverty is a big difficult issue, which will not be solved by sentiment and sponsorship.

    Auckland • Since Nov 2006 • 1000 posts Report Reply

  • Craig Ranapia,

    But to get the shrinking charity money you need to promote your organisation (your brand).

    And to continue the rather icky-PR speak, some charities have well-established brands and a high degree of public recognition. Am I the only person who hadn't heard of Kids Can until a week ago, and tend to stick to donating to organisations like the Cancer Society, Plunket, Women's Refuge etc. that were knocking around long before I had more than two copper pennies to rub together?

    North Shore, Auckland • Since Nov 2006 • 12052 posts Report Reply

  • Russell Brown,

    Has anybody identified any need for the raincoats and shoes that KidsCan provides? It looks to me like another opportunity for Adidas (which supplies the branded coats) to obtain yet more free publicity.

    Yes, and the No.1 Shoe Warehouse seems to supply the shoes, for its own promotional return. It can seem that the chief purpose of KidsCan is less to supply needed goods than to supply promotional opportunities.

    Auckland • Since Nov 2006 • 19019 posts Report Reply

  • Craig Ranapia,

    There is a big difference between charities like Oxfam which are committed to addressing broad issues of poverty and those like KidsCan which have rather limited and (in my less-than-humble opinion) rather simplistic aims: give them coats and shoes and self-respect. Poverty is a big difficult issue, which will not be solved by sentiment and sponsorship.

    Certainly not, but OTOH I suspect there's also a certain discomfort zone people can feel about donating to charities that, in large part, act as lobbyists rather than directly providing goods and/or services. And before anyone jumps on my head, I'm perfectly well-aware that that line can be pretty hard to draw with any confidence. Personally, I can find the Women's Refuge pretty hard to take ideologically but WTF... if they're practically helping to get women and children the hell out of unsafe situations, that's a perfectly acceptable quid pro quo.

    North Shore, Auckland • Since Nov 2006 • 12052 posts Report Reply

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