I had an interesting discussion with some friends the other day about donating to Oxfam. We were discussing encouraging people attending a Christmas party to donate to a worthy cause. One of my friends didn’t want to support Oxfam because, as she understood it, a large proportion (over 40%) of donations to Oxfam went on overheads. As Cathy and I donated over $3000 to them this year, I was interested in following this up.
According to their Australian website:
- 15% of their expenditure is fundraising and promotion (it is “invested to generate future income”)
- 15% is administration (it is “spent on essential administration”)
- 70% goes to their “development, advocacy, and humanitarian programs around the world” .
I’ve done a web search and haven’t found anything that questions these figures. There could be an argument that less than 70% goes to aid recipients because Oxfam is also engaged in advocacy and campaign work but, for me, that is one of its strengths.
A central issue is how much charities should spend on “overheads”. In the following TED talk, Dan Pallotta (founder of AIDS Rider) suggests that there seems to be two rule books: one for not-for-profits and one for the rest of the business world. He highlights five areas where not-for-profits are treated differently to for-profits:
- It is OK to financially reward business people for success, but not staff of not-for-profits. E.g., there is a gap of $316,000 between “the median compensation for a Stanford MBA, with bonus, at the age of 38” and that of a CEO of a “hunger charity”.
- It is OK for business to invest in advertising and marketing, but not-for-profits need to keep “overheads” low.
- It is OK for business to take risks and to be innovative, but not-for-profits are not given the same opportunity to try innovative (but risky) approaches.
- It is OK for business to take the time to achieve results, but not not-for-profits.
- It is OK for business to pay profits to investors, but not-for-profits can’t and thus they are locked out of the “multi-trillion-dollar capital markets”.
I don’t agree with everything he says, but he certainly raises some challenging questions.
In terms of overheads for aid organisations, here is what Dan had to say about advertising and marketing.
So we tell the for-profit sector, “Spend, spend, spend on advertising until the last dollar no longer produces a penny of value.” But we don’t like to see our donations spent on advertising in charity. Our attitude is, “Well, look, if you can get the advertising donated, you know, at four o’clock in the morning, I’m okay with that. But I don’t want my donations spent on advertising. I want it go to the needy.” As if the money invested in advertising could not bring in dramatically greater sums of money to serve the needy. (At 5:45)
He goes on to suggest an over-emphasis on overheads “forces organizations to go without the overhead things they really need to grow in the interest of keeping overhead low.”
I’ve also looked for what others have said about Oxfam:
- Oxfam is one of the top 10 charities recommended by The Life You Can Save. (Peter Singer, who wrote the book that the website is based on, ” donates a significant part of what he gives to Oxfam”.)
- Givewell does not recommend Oxfam because of its failure to “publish high-quality monitoring and evaluation reports on its website” and it does not “stand out for program selection” (largely because less than 75% of its funding is devoted to what Givewell considers “priority programs”).
- Giving What We Can says, “We are regularly asked what our view is of Oxfam, and have previously had to say that we just don’t know, because not enough information is collected to assess their impact.” The also say that Oxfam has recently released a report that evaluated 26 of its projects “spread across all categories of intervention Oxfam is involved in.” They concluded that “It is a testament to Oxfam’s commitment to transparency that they have published even the unfavourable results. The general conclusion is that most Oxfam interventions make things better, but only on some measures.”
It’s an interesting dilemma when you think about it. Oxfam is criticised for not doing enough evaluation but also criticised for its overheads being too high. High quality evaluations are expensive.
I support Oxfam because of its approach. They address three main areas:
- Contributing to long-term development and supporting communities to take control, solve their own problems and rely on themselves.
- Campaigning for change because poverty isn’t just about the lack of resources; it’s also about inequality, injustice, and the distribution of resources.
- Responding to emergencies around the world.
Oxfam has made two central commitments:
- Active citizenship — helping people in poverty to achieve their rights as full citizens, demand justice, and change beliefs, policies and practices to improve people’s lives
- Accountability — supporting people to hold governments, corporations and international organisations, including Oxfam, to account for their responsibilities
They thus adopt a rights based approach based on:
- Economic Justice “We support people to make a decent living, leading dignified lives free from poverty and hunger.”
- Essential Services “We help people to access clean water, healthcare, education and sanitation.”
- Rights in crisis “We support people to live safe from war, violence and natural disaster.”
- Gender Justice “We support women and men to enjoy equal rights, and live free from violence and discrimination.” (Read more)
I support Oxfam rather than other overseas aid organisation because they don’t just provide aid (e.g., emergency relief) and community development (e.g., education) but also work towards economic justice (e.g., fair trade), social change (e.g., gender equality) and environmental sustainability (e.g., climate change). You can read more about their programs HERE and I have previously posted about some of their asset-based community-driven development (ABCD) work in Africa (see links below).
I have been supporting Oxfam for over 40 years and will continue to do so. It isn’t perfect and I’m sure there are areas where it could improve but from what I have seen, read and heard, they are certainly an organisation that is well worth supporting.
Meanwhile, my friends have decided to support Assistance Dogs NSW this Christmas.
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