By CASE rules, that would be 99% overhead. Dunno if that’s standard Association of Fundraising Professionals procedure, but I think so.
I’m of two minds about your example. On the one hand, yes, you could say that UW “made” money in that market. By the same token, if I gave a fundraising consultant $500, and that consultant went out and raised $1,000 on my behalf, you could say that the consultant “made” $500. I’d do it, if I could. From a business standpoint, it makes perfect sense.
On the other, though, fundraising just doesn’t work on the same business model. When you go out to buy a cup of coffee, you don’t expect to be able to get a detailed breakdown of how the labor, coffee beans, electricity, water, and profit affected the price. But donors to charities expect this of us, and of most charities, as a matter of course. Scholarship endowment donors want to know, for example, which student received scholarship monies, how much each received, how much money is left in the endowment, and how much money the endowment made in investment income. And if something goes wrong, they let us know–loudly.
Here’s where our problems with UW come in. So many people give, say, $1,000 to UW on our behalf, then expect us to credit them with a $1,000 gift. Then the shit hits our fan. That’s where the overhead issues are so damaging to us, and to many other charities. If a corporation hires expensive consultants or gives its CEOs big bonuses, shareholders don’t really mind so long as company stock values are high; the company is making money and doing its job. But donors do mind if their donations are not specifically applied to their intended causes, even if their donations are “re-invested” into raising more money. They get particularly angry if up to 20% of their gift through UW never reaches the target charity they intended it for. And they get downright furious if they see money being mishandled, as has often happened in the past with UW, or UW executives pulling down six-figure salaries.* So that, in a nutshell, is my beef with UW.
*Note: I know fundraising executives earn much less than their corporate counterparts. All fundraising workers do, a fact which I am reminded of every two weeks. But there really are people out there who think we should be working for nothing.