Season for giving — but who’s getting it?
OH, man. I feel so mean, yet it has to be said: Be careful when you’re making donations this Christmas.
Yes, it’s the season of giving and I sound like the Grinch, especially at this time of year when charities and donations are at the front of mind.
But — and it’s a big but — consumers are particularly vulnerable to parting with their money at Christmas and a lot of that money will not go where we think it’s going to go.
The charities and people who really need our donations only get a fraction of what we give or, in many cases, nothing.
Hundreds of millions of dollars are siphoned off and paid as commissions, sign-up bonuses and profits to professional fundraisers and subcontractors. I’m guessing that’s not what you intended.
According to the Australian Competition and Consumer Commission’s latest report about the Australian charity sector, when we sign up as a regular monthly donor, the first eight to 17 monthly payments you make go to pay commissions to the fundraising agencies.
Just think about that for a moment. It takes an average of a year of making payments before the charity starts to receive any money.
And if you have second thoughts — or as is often the case when we gift a donation to a family member for Christmas — and the payments stop after 12 months, then the charity gets absolutely nothing.
Even after two years of regular payments, the charity still only gets about half the money donated.
Any real benefit doesn’t start to filter through until about five years, after which the charity gets the equivalent of 80 per cent of total donations and the agency’s big, fat, upfront commission averages down to about 20 per cent.
And we’re not talking small amounts. Each year about 300,000 people sign up to start monthly donations.
Overall, Aussies are very generous. About 80 per cent of the population gives one-off donations, bequests and regular contributions to charities each year.
Last year Aussies gave more than $10 billion to charities and I was among them with my regular monthly donations, so it worries me that fundraising companies are stripping out so much of this money.
The ACCC is also concerned about the lack of transparency. As we all know, commissions are fraught with danger. Although the ACCC does not regulate the charity sector, it does have a role to ensure consumers are not hoodwinked.
The report found fundrais- ers use hard-sell tactics, mislead people and that there is an overall lack of transparency about who they work for and where the money goes.
Like all organisations charities have a legal obligation to consumers. So before you purchase someone a donation or make one for yourself, stop and ask the person:
Do you work directly for the charity or for a fundraising agency?
How much of my donation will go to commissions or agency fees?