The Everyday Philanthropist

CHAPTER 19Overhead Measures Discriminate Against Underdog Causes

Breast cancer is a popular cause. Heroin addiction is not. A breast cancer charity may be able to run a $10,000 social media ad campaign that attracts $50,000 in donations. That's a 20% cost of fundraising. The heroin recovery charity may run a similar campaign for $10,000 and only take in $20,000 in donations, because their cause comes with stigma and isn't as popular with the public. Their cost of fundraising is 50%. They both did the same thing, spent the same money, but if you only looked at their 50% fundraising cost, you might conclude that the heroin recovery organization is misusing funds. The media might well encourage you to think that way with a story that says precisely that.

You would never want to harm an underdog cause that finds it difficult and expensive to raise funds simply because there are not many people affected by the issue. Yet that is exactly what reliance on simplistic overhead ratios encourages you to do. It encourages us to render harsh, penalizing, often moral judgment against underdog causes that are struggling to find donors.

In 1988, the Supreme Court took up the matter of a North Carolina law which stated that any professional fundraiser's fee exceeding 20% of the total funds raised was unreasonable. The law sounds more than reasonable, doesn't it? Then why did the Supreme Court rule against it, 7‐2?

With wisdom ahead of its time, the Court wrote that the law, “unconstitutionally ...