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Do donations make a difference to charities?

According to the Charity Commission, the UK’s 160,000 registered charities raise an eye watering £52 billion every single year. That’s £1 billion towards good causes every week.

So, if charities are making so much money, do your small donations actually make any difference? Charities often receive other sources of funding while many of them seem to spend lots of your valuable donations on mailshots, TV advertising and well-paid managers.

So, do your donations actually make a difference to charities?

Three different types of donation

There are three different types of donation that you can make to charity:

• Money – cash donations
• Goods – donating old clothes, books and other goods to charity shops
• Time – offering your time on a volunteer basis to support a charity

Even if you can’t afford to make a cash donation to a charity, donating your old goods or simply your time can make a huge difference to the work a charity can do.

Donations are the most important source of revenue to charities

Lots of charities receive statutory income, grants, contributions from companies and donations from charitable trusts. And, many charities hold a level of savings in reserve as well as investing some of their cash in order to make money in interest, dividends or on the stock market. So, do your small cash donations actually make any difference to a charity?

The answer is ‘yes’.

While many charities receive some money from these sources, individual donations are by some distance the most important source of income for most UK charities. And, 56% of charities in the UK have a budget of £10,000 or less. Your local playing field charity, village hall or PTA relies heavily on local, cash donations to survive.

Without your donations, many charities would simply not be able to continue.

The costs of fundraising

At some point, you will have received a mailing from a charity asking you to make a donation. You may have been approached in your town centre by someone asking you to sign a direct debit to make a charitable donation. Or, you may have seen a TV advert for a particular charity.

All these things cost money, which is coming out of your cash donations. So, you may wonder why you’re making a donation when all the charity does is spend it on fundraising.

However, most UK charities find that it costs between 15p and 25p to raise £1. So, even though your donation may be spent on fundraising, it still results in much more cash for the charity.

Admin and management costs

Lots of charitable donors worry about making donations to large charities that pay executives and managers significant salaries to run the charity.

However, running a large charity is a complicated business. Managing large numbers of staff and volunteers, often across the world, is a tricky business and requires competent, professional people who expect to be paid accordingly.

Typically, charities spend between just 5% and 13% of their total expenditure on management. Without it, however, the charity would likely fail.