How much should NGOs spend on ‘admin’ or ‘overhead’ costs?
In India, the law is largely silent with regard to admin threshold
limits.
limits.
The only place where we find a reference to this is under the Foreign
Contribution Regulations Act 2010 where it is stipulated that administrative
expenses in excess of 50% of contributions received must be spent only with
prior permission of the Ministry of Home Affairs. 50%
on admin expenses is anyway a very liberal threshold.
Contribution Regulations Act 2010 where it is stipulated that administrative
expenses in excess of 50% of contributions received must be spent only with
prior permission of the Ministry of Home Affairs. 50%
on admin expenses is anyway a very liberal threshold.
While there are no legal requirements for a predetermined
maximum of overhead spending for charitable organisations, watchdog groups all
over the world set maximum limits and police the spending habits of nonprofit
organisations. Overhead includes a nonprofit’s administrative expenses,
which are not directly related to the organization’s programs or services.
maximum of overhead spending for charitable organisations, watchdog groups all
over the world set maximum limits and police the spending habits of nonprofit
organisations. Overhead includes a nonprofit’s administrative expenses,
which are not directly related to the organization’s programs or services.
Internationally, Charity Navigator sets a goal of “less
than 10 percent” of the nonprofit’s budget for fundraising spending and
considers an organization that spends less than one-third of its budget on
program expense to be failing in its mission.
than 10 percent” of the nonprofit’s budget for fundraising spending and
considers an organization that spends less than one-third of its budget on
program expense to be failing in its mission.
The Charities Review Council, located in Minnesota,
recommends no more than 35 percent of spending on overhead and at least 65
percent of total spending on program expenses.
recommends no more than 35 percent of spending on overhead and at least 65
percent of total spending on program expenses.
In India, 10% to 15% on overheads would be considered
healthy and ideal and from 15% to 25% as fair. 25% to 35% would be
acceptable depending in nature, scale and outreach of activity.
healthy and ideal and from 15% to 25% as fair. 25% to 35% would be
acceptable depending in nature, scale and outreach of activity.
WHO’s travel budget!!!
Very recently the World Health Organization (WHO) came under flax for
spending about US $ 200 million a year on travel, a figure that far
exceeds what it spent on fighting significant public health problems such as
AIDS or malaria.
spending about US $ 200 million a year on travel, a figure that far
exceeds what it spent on fighting significant public health problems such as
AIDS or malaria.
The
Associated Press (AP) news agency reported that WHO is struggling to get its
own travel costs under control, as it pleads for more money to fund its
responses to global health crises, citing internal documents. Despite new rules
introduced to curb its travel budget, members of staff have been breaking rules
by booking business class flight tickets and rooms in luxury hotels, AP
reported.
Associated Press (AP) news agency reported that WHO is struggling to get its
own travel costs under control, as it pleads for more money to fund its
responses to global health crises, citing internal documents. Despite new rules
introduced to curb its travel budget, members of staff have been breaking rules
by booking business class flight tickets and rooms in luxury hotels, AP
reported.
In 2016, the agency spent US $ 200 million on
travel while the figure was US $ 234 million in 2015, according to AP figures.
In comparison, WHO spent only about US $ 71 million on AIDS and hepatitis! On
malaria, it spent US $ 61 million, and it invested US $ 59 million to slow
tuberculosis.
travel while the figure was US $ 234 million in 2015, according to AP figures.
In comparison, WHO spent only about US $ 71 million on AIDS and hepatitis! On
malaria, it spent US $ 61 million, and it invested US $ 59 million to slow
tuberculosis.
WHO Director-General Margaret Chan was
reported to have spent US $ 3,70,000 on travel in 2015.
reported to have spent US $ 3,70,000 on travel in 2015.
We agree that, travel is an essential aspect
of WHO’s global health work – convening experts for collective decision-making
on health interventions or travelling experts anywhere in the world that
requires technical assistance for global health, however, neither do these
figures look good in the audited statements of account nor do they indicate
judicious use of charity funds. There can be no justification for flying first
class.
of WHO’s global health work – convening experts for collective decision-making
on health interventions or travelling experts anywhere in the world that
requires technical assistance for global health, however, neither do these
figures look good in the audited statements of account nor do they indicate
judicious use of charity funds. There can be no justification for flying first
class.
With 37,000 aid workers,
Doctors-Without-Borders spends about US $ 43 million on travel per year, while
the UN children’s agency UNICEF, which employs 13,000 people, spends US $ 140
million on global travel in 2016.
Doctors-Without-Borders spends about US $ 43 million on travel per year, while
the UN children’s agency UNICEF, which employs 13,000 people, spends US $ 140
million on global travel in 2016.
There are lessons to learn from this both by
the donor and recipient community here in India. By
comparison Indian NGOs are far more conservative and thrifty where is comes to
overheads and yet donors, be they individuals or institutions continue to
push NGOs to higher levels of thrift. As a wit recently said about a well-known
Indian Foundation, “their new policy seems to be in advancing philanthropy
through punishing NGOs and alleviating poverty by impoverishing NGOs”
the donor and recipient community here in India. By
comparison Indian NGOs are far more conservative and thrifty where is comes to
overheads and yet donors, be they individuals or institutions continue to
push NGOs to higher levels of thrift. As a wit recently said about a well-known
Indian Foundation, “their new policy seems to be in advancing philanthropy
through punishing NGOs and alleviating poverty by impoverishing NGOs”
To know more about
CAP’s legal advisory assistance visit our website www.capindia.in OR write
to – connect@capindia.in
CAP’s legal advisory assistance visit our website www.capindia.in OR write
to – connect@capindia.in
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