Most of your donation goes to project costs, and the rest pays for the administration, compliance and oversight that get it there safely. This explains what those costs cover, why a 100 per cent claim deserves a closer look, and how to follow a contribution through to a distribution.

Key takeaways

·       Every charity has administration costs. The real question is who pays them and whether the charity says so openly.

·       The ACNC says administration ratios aren't a reliable way to compare charities, because there's no standard definition of what counts as administration.

·       A charity shouldn't claim 100 per cent of donations reach people if part of those donations pays for administration.

·       Monitoring, verification and audits cost money, and they're also how you know a gift reached anyone.

·       AusRelief shares its audited financial statements with administration shown as its own line, and supporters are always welcome to ask how a gift will be used.

Where does my donation go?

The largest share goes to the projects themselves, and the remainder keeps the organisation running. For anyone who'd like to see how this works in practice, AusRelief's financial statements are available in the annual report. The most recent one covers the year ended 30 June 2023 and groups spending into five areas.

So in that year, project costs made up roughly 80 cents of every dollar AusRelief spent, and the other four lines made up the rest. Sharing those figures openly feels like the honest place to begin. Even so, a single ratio only tells part of the story, as the next sections explain.

What do charity admin costs actually cover?

Administration covers the costs of keeping a charity able to operate. The ACNC's guidance on charity money myths lists office rent, electricity, IT systems and the salaries of the chief executive and office staff who don't deliver services directly. In practice, that also means receipting gifts, keeping records, paying suppliers on time and answering supporters' questions.

On top of that, the ACNC points out that some administration is a sign of good practice. A charity that spends money training staff and evaluating its programmes may well be more effective than one that doesn't. That's why the regulator encourages donors to look at transparency, governance, leadership and impact alongside cost.

Do charities take a percentage of donations?

Yes, most do, because administration is always funded by somebody. When a charity says 100 per cent of your gift reaches the field, the cost has usually been covered elsewhere, such as by a separate funder, or classified under a different heading. Neither is wrong in itself. Still, it's fair to ask which one applies.

The ACNC is direct about this. Its guidance on charity fundraising and the public says a charity shouldn't seek donations by claiming 100 per cent will benefit those it serves if part of those donations goes to administration. And in its guidance on charities and administration costs, the ACNC explains that there's no consistent definition of administration in Australia. One charity's "administration" can be another's "project cost", so comparing percentages between organisations can mislead more than it informs.

Why do monitoring and verification cost money?

Because someone has to check the work, and that checking takes time, travel and records. Before a food distribution, for example, local teams identify households against criteria agreed in advance, rather than serving whoever arrives first. After it, the distribution is reported on, covering where it ran and how many households received a package. Both steps cost money, and both are what make a report trustworthy.

The same applies further up the chain. AusRelief's financial statements are compiled by an accountant and audited by a registered auditor, and the board signs off on them. In emergencies, funds move through our own teams on the ground and vetted implementing partners. An implementing partner is a local organisation that delivers aid directly, and vetting one properly takes work before the first parcel moves. Sector frameworks such as the Core Humanitarian Standard treat this kind of accountability to communities as part of doing aid well.

How does a contribution reach a distribution?

It moves through a series of steps, and each one leaves a record you can ask about. The table below follows a typical contribution from the moment you give to the point it appears in public reporting.

For those who enjoy the detail, this pattern comes to life in the story of how food distributions are planned, and again in how an emergency response is planned and delivered. The same principle runs through food aid, water and sanitation, education and emergency appeals. Closer to home, the Grocery Drive Program and Crisis and Emergency Support work with families in Sydney.

How can I verify a charity spends donations the way it claims?

The public record is a good place to begin, and a conversation with the charity itself often fills in the rest. Every registered charity must report annually to the ACNC through an Annual Information Statement, and medium and large charities must also lodge a financial report. That information is open to everyone, free of charge, on the ACNC Charity Register.

After that, a few checks go a long way, and our checklist for choosing a charity in Australia covers them in more detail:

·       Read the financial statements. Look for spending broken into clear lines and for an auditor's report.

·       Compare with the register. The ACNC's guide to understanding financial information on the register explains what each figure means.

·       Look for named leadership. It helps to know who is responsible for the work. At AusRelief, you can meet the chair, co-founders, chief executive and chief operating officer in Who We Are.

·       Check sector codes. International aid organisations can sign the voluntary ACFID Code of Conduct, which sets standards for accountability and transparency.

·       Ask. A charity that reports openly should be able to tell you how a gift will be used.

Questions about a particular gift are always welcome too, and AusRelief offers an easy way for supporters to find out how a tax-deductible donation will be spent. It can also help to picture the wider work that gifts support, and an overview of what AusRelief does in Australia and overseas brings each project together in one place.

Shared effort and what continued support makes possible

Administration is what lets a project run on schedule, report honestly and still be there next year. So when supporters give steadily, through a monthly gift, a one-off quick donation or a fundraiser of their own, the work can be planned rather than improvised. Smaller amounts matter here too, as we explain in why micro-giving works. And if you'd like to give time, there are ways to get involved locally.

When people give together, the impact grows, supporting more families, more consistently. Clear reporting means you can see where that support went.

Frequently asked questions

Where does my donation go when I give to a charity?

Most of it goes to the charity's projects, and the rest covers administration, compliance and oversight. The split varies between organisations and isn't measured the same way everywhere. To see a specific charity's figures, read its financial statements or its entry on the ACNC Charity Register, and ask it directly if anything is unclear.

Do charities take a percentage of donations?

Most charities use part of their income for administration, because rent, systems, staff and audits have to be paid for. Some cover those costs through separate funding, which is how a 100 per cent claim can be accurate. If a charity makes that claim, it's reasonable to ask who funds its administration instead.

How much of my donation actually reaches people?

It depends on the charity and on how it classifies costs. The ACNC notes there's no standard definition of administration in Australia, so percentages aren't directly comparable. A better guide is whether the charity publishes clear financial statements, reports on its work and answers your questions about a specific gift.

What percentage of an AusRelief donation reaches the field?

In the year ended 30 June 2023, project costs were $2,526,595 out of total expenditure of $3,143,980, or roughly 80 per cent. The rest covered administration, operations, IT and compliance. Those figures are drawn from AusRelief's audited financial statements, which are included in the annual report for anyone who'd like a closer look.

How can I verify a charity spends donations the way it claims?

Search the charity on the ACNC Charity Register and read its latest financial report, including the auditor's statement. Then compare it with the charity's own annual report and project updates. If you still have questions, contact the charity. AusRelief's website also offers a way for supporters to ask how a gift will be spent.

Is it bad if a charity has high administration costs?

Not necessarily. The ACNC says high administration costs alone don't show a charity is poorly run, since some work, such as remote health services, costs more to deliver. Spending on staff training and programme evaluation can make a charity more effective. Transparency, governance and impact are better guides.

Curious about where your support goes?

The AusRelief annual report shares the financial side of the work, and our projects show where it reaches families.