Most Americans Believe Non-Profits are Not Financially Efficient

Most Americans believe non-profit organizations and charities are not financially efficient enough in their work, a new study shows.

In a survey conducted by Ellison Research on over 1,000 American adults, 62 percent said they believe the typical non-profit spends more than what is reasonable on overhead expenses such as fundraising and administration. The average American believes 36.3 cents of every dollar they give to a typical non-profit group goes toward overhead expenses.

The reasonable amount that should go to such expenses should be 22.4 cents for every dollar, the average American believes, according to the study released Wednesday. But 43 percent of all Americans say a figure below 20 cents on the dollar should be a reasonable proportion for overhead expenses and 74 percent say a figure below 30 cents on the dollar should be spent on overhead.

Among evangelical Christians, 57 percent believe overhead expenses are higher than a reasonable standard and 62 percent of non-evangelical Christians say non-profits spend more than what is reasonable. Those who attend Catholic services (68 percent) were more likely to think overhead expenses are higher compared to those who attend Protestant services (58 percent).

Also, older Americans were more likely to believe overhead expenses are higher than a reasonable standard compared to younger ones.

"We've spoken with tens of thousands of donors over the years, and one thing that is consistent is that most people really don't know much about how non-profits operate," Ron Sellers, president of Ellison Research, stated. "But even when people are misinformed, their perceptions still influence how they make giving decisions. That's why it's so important to understand how people perceive charities in general, as well as why individual non-profits really need to learn how their own donors or potential donors see them."

Sellers further noted that when people do not know much about a particular organization they might consider supporting, their perception of the charity will be based on how they see charities in general.

"The people who believe non-profits are spending too much on overhead will tend to make that assumption about any non-profit they come across," he said. "It's almost as if organizations are automatically under suspicion until they prove themselves innocent."

Only 28 percent of Americans believe the typical charitable organization is spending a reasonable proportion on overhead and only 10 percent believe non-profits typically spend less on overhead than what they would consider to be a reasonable standard, according to the study.

Sellers cautioned that the study is not an indictment of the actual practices of the non-profit industry, but still drew attention to the public's negative perception of the industry.

"[E]ven if it's not the truth, the old adage still applies – for donors, perception is reality," he said. "The public sets a very high perceptual standard for the financial efficiency of charities, and it's up to charities either to meet that standard or to re-educate people on why that standard is not reasonable. Of course, the third choice is simply to face the consequences when potential donors don't see them as suitably efficient."

The study comes as six high-profile ministries are being investigated by Sen. Charles Grassley, the top Republican of the Senate Finance Committee, for alleged abuse of their non-profit status and opulent spending. Grassley sent letters in November requesting for financial documents and responses to questions regarding personal and organizational finances to Paula and Randy White, Creflo Dollar, Eddie Long, Benny Hinn, Joyce Meyer and Kenneth and Gloria Copeland.

Only Joyce Meyer Ministries has pledged full cooperation with the investigation and has turned over financial documents. Grassley said last month he is sending out a second round of letters asking the ministries that have not responded to comply.