Actually, Shadow Minister, I think colinsett put it more succinctly than I, albeit in a slightly different context.

>>how better is their activity than that of shore-line scavengers - collectors of flotsam from never-ending tragedies of human shipwreck<<

My underlying objection is to a bunch of people earning a more-than-decent wage from the permanent state of suffering endured by people far less fortunate than themselves.

The charity industry is the product of corporate one-track minds. Pay is set at industrial, rather than charitable levels. The dollar you put in the tin at the top of the escalator is destined for the pocket of the bloke next to you on the platform, waiting for his train to the leafy suburbs.

Leaving aside your "specialist... called in to review and rework in a "consulting" like fashion" hat for a moment, do you see absolutely nothing wrong with this picture?

>>With an income of $700m world wide Oxfam can do a significant amount of good<<

I'll ignore for a moment that you are still referring to global, rather than local operations, and ask you this. Would the $60 million they collect in Australia not be better off in the hands of organizations that do not have the massive overheads of the charity industry? Would the "management overheads" not be better used alleviating the misery that they make so much fuss about?

You mentioned earlier the aspect of "competition for funds".

Would it not be better if the money spent by each member of the charity industry in fighting each other were spent on the target of their assistance?

All that I have been trying to point out is that it is totally inappropriate for charity to be industrialized as it is. There is a limit to the value that an expensive professional can deliver. What currently exists is pure overkill, and massive duplication.

Perhaps your incredible experience would be better directed to determining how these industrial charities can be redesigned, to deliver better results than they currently are, with fewer overheads and more efficient processes, rather than blindly defending the status quo.

Pericles,

This is your 13th post without substantiation.

Your statement "Would the $60 million they collect in Australia not be better off in the hands of organizations that do not have the massive overheads of the charity industry?"

If you bothered to read the report you would see that their admin overheads are in the order of 6%. Most similar logistics based entities seldom manage less than 15%, and gov contractors are typically 20% or greater. A 0% admin would mean no one to plan, organise, schedule, recruit etc, and the organisation would simply cease to function.

If you have anything to substantiate your bleating of "pure overkill, and massive duplication" I would sure like to see it as they seem to have hidden it very well.

If the world was a perfect place a charity could solve all the worlds problems without expending a cent as everyone would work for free and no one would charge them anything. Until then you need to emerge into the real world from your la la land.

I am unimpressed by your bleatings about "no substantiation" Shadow Minister, since precisely the same label can be applied to your contributions. The fact that you apply a lower standard of proof to your own opinions cuts no ice, I'm afraid, especially as you have been guilty on a number of occasions of changing the rules.

But enough of that.

Let's have a look at your latest offering.

>>If you bothered to read the report you would see that their admin overheads are in the order of 6%.<<

Where would you count "cost of raising funds" and "cost of goods sold" in your forensic analysis of their P&L? After all, they reduce the amount that is available for distribution, n'est-ce pas?

How about we agree that anything that can be subtracted from the passage of money and value of goods be described as "management expenses"? Can we do that? Would that be reasonable?

OK, Now we can take another look at the numbers - but before we do, may I just point out that:

>>Most similar logistics based entities seldom manage less than 15%, and gov contractors are typically 20% or greater.<<

... are without "substantiation".

Just thought I'd mention it.

Back to the drawing board.

Of the organizations that I was referring to in my original observations, these are the figures:

Oxfam: Revenue $63.4m Disbursements $36.1m (57%) Management Costs $21.2m (33,4%)
World Vision: Revenue $356m Disbursements $313m (87.9%) Management Costs $54m (15%)
Amnesty International Australia: Revenue $18.9m Disbursements $12.4m (65.6%) Management Costs $6.5m (34.4%)
CARE Australia: Revenue $60.8m Disbursements $52.6m (86.5%) Management Costs $8.7m (14.3%)
PLAN Australia: Revenue $24.7m Disbursements $19.4m (78.5%) Management Costs $5.8m (23.4%)

(I've ignored Greenpeace bacuase I'm unsure how to classify their expenditures.)

Any comments? Observations?

>>A 0% admin would mean no one to plan, organise, schedule, recruit etc, and the organisation would simply cease to function.<<

Not necessarily. It is possible that volunteers might be happy to donate their time and expertise.

You assume that if you don't pay them, they can't be worth anything.

Would that also apply to Bill Gates?

Oxfam: Revenue $63.4m Disbursements $36.1m (57%) Management Costs $21.2m (33,4%)
World Vision: Revenue $356m Disbursements $313m (87.9%) Management Costs $54m (15%)
Amnesty International Australia: Revenue $18.9m Disbursements $12.4m (65.6%) Management Costs $6.5m (34.4%)
CARE Australia: Revenue $60.8m Disbursements $52.6m (86.5%) Management Costs $8.7m (14.3%)
PLAN Australia: Revenue $24.7m Disbursements $19.4m (78.5%) Management Costs $5.8m (23.4%)

The general trend in these figures is that the bigger the total disbursements, the more efficiency there is in getting them - at least nomonally - to their intended targets. No doubt this is due to the fact that organisations, no matter how big, have similar fixed costs (setting up an office, etc). So, the moral to the story is that it would be in the best interests of the aid beneficiaries that the smaller operations merge together and cut the overall proportion they spend on admin costs. But, the one thing to watch out for in this scenario is that some of the management will use the transition to push for bigger wages (on the basis of having a bigger operation to oversee) and will exacerbate the divide between the volunteer doers and the professional oversighters.

I can only see this weakening the whole operation as the volunteers will eventually get sick and tired of doing everything on the smell of an oily rag and external observers will see the NGO management as elitist opportunists of one form or another and will stop donating.

Fair points RobP.

The only additional observation I would make is that there is substantial room in these accounts for some creativity.

World Vision for example have assessed the value of "donated goods" both as a revenue item and disbursement item. This is perfectly acceptable in a trading environment - there is even a balance sheet item that records the "if liquidated" position of those donated goods - but it is a little cheeky for a charity to include them as revenue if the objective is not to realize the cash value, but pass on the goods to a needy recipient.

The notes to the P&L describe them as being "recorded at fair value, which is represented by either wholesale value or an independent valuation", and in doing so gives them an entirely commercial status. The result is an additional $100m of cash value, that is used to reduce the MER.

There are also some other convenient hidey-holes, such as "Project design, development and management", that are listed under "disbursements". I would have thought that any cost of doing business should appear as a management expense, since the benefit does not directly reach the recipient.

Using only these two elements of difference of opinion, the restated WV position would be:

World Vision: Revenue $259m Disbursements $208m (80.0%) Management Costs $59m (23%)

So while I agree with the overall point that in charities, as with many businesses, there are economies of scale, I would still argue that there is far too much business, and far too little charity, in evidence.

Sounds reasonable, Pericles.

As always, the devil is there in the detail. The headline figures of any organisation only tell one so much. The only way the full truth will come out is if there is a spotlight put on the entire company account and a full audit conducted. As you point out, certain headline figures can be used to hide inconvenient or controversial aspects of an organisation's business - like slush funds for non-core business activities. In my experience, the bigger the organisation, the bigger the slush fund.

Let's hope for everyone's sake that the full truth comes out.