I’ve heard of companies running fundraising drives and taking care of the administrative expenses, but usually in such cases the money is passed onto an actual charity. And I don’t see how it’s possible not to have some operational costs.
Sure, you could raise, say, a million bucks, and then give it away to people who are begging on the street. But surely the donors would want to have some assurance that the money is doing something useful. So any real charity is going to evaluate the effectiveness of its programs and that costs money.
You could have two organizations that support poor people in Africa. One just sends money to people there, while the other builds schools and clinics and they hire people to staff them. That’s going to require some administrative costs.
One of the best, most efficient ways to support people in the third world is through remittances. When a native of Mexico or the Phillipines or Nigeria moves to a First World country, gets employment and sends money to his/her family back home, there’s no friction; all the money (less transfer costs) is spent locally.
Well established foundations have large legacy funds that support the operating costs. The Rhode Island Foundation has well over $500 million in a fund that covers all of their expenses on the interest alone and some of that interest goes to charitable causes when the return exceeds their costs.
Yes. But if they’re doing their job well they’ll make sure those are justified. They should be watching the organizations that receive money carefully to make sure they are effective. That’s their advantage, they are doing the oversight work. There’s no guarantee, but if you find an intermediary that has to support itself they will be less likely to provide money to other organizations which are padding themselves instead of providing for the actual cause. Your alternative in any case is to give the money directly to people in need yourself on a case by case basis and that won’t turn out to be very practical.
Why use an intermediary at all? Why not, as suggested upthread, give directly to a charitable cause that you’ve researched and are satisfied with its level of administrative expense?
For a well established and well researched charity the only benefit to an intermediary is that they may provide additional funds to the charity you selected. Otherwise, an intermediary is a good idea for less well established charities. An intermediary could provide additional oversight. You may also not have a particular charity you want to support and a good intermediary provides an opportunity for a more general donation. In addition, if you plan to leave money for charity in your estate you can name an appropriate intermediary that would be better suited to distribute that money sometime in the future when you won’t be able to do the research yourself. But for a known cause which you know is well managed you may as well give them money directly.