In a world where governments are listening to our Skype conversations and people share ultrasound photos of their four-month-old fetus on social media, sometimes it seems like information is a little too accessible. Yet when it comes to important topics, like where exactly your program fee for a volunteer program goes, it can feel like wading through the La Brea tar pits to get any information at all.
Luckily, in the United States nonprofits are required to make their financial information public, meaning they legally have to let you peek into their pockets. Some organizations choose to publish this information directly on their websites or in annual reports, but even if they don’t, it’s available in other places.
Financial information and reports can be dense creatures and aren’t much fun to wade through, unless you’re the kind of person who enjoys perusing actuarial tables in your free time. Still, they’re a vital part of what keeps nonprofit organizations honest, and they often contain all the information you’re looking for -- if you just know how to look.
Fortunately, we’re here to take a look through some of those pages and break down the important information to help you better understand where exactly your hard-earned money is going when you fork over that program fee to volunteer abroad.
Where Do Volunteer Organizations Spend Money?
Even if you do have a financial report in front of you, it can still be a challenge to find the specific breakdown of how your contribution gets allocated. Some organizations helpfully highlight exactly where volunteer contributions go -- this is a good sign, since transparency is important when it comes to NGOs and volunteer placement providers.
You can also request this information from a program if they don’t have it online -- if they seem unwilling to disclose their financial information, that should set off some alarm bells.
Different programs have different titles and descriptions for certain types of expenses, but they all fall under a few broad categories. When researching this article, we took a look at three program providers currently listed on Go Overseas and compared their expenses. We looked at:
- Project running costs
- Administrative costs
- Volunteer costs
- Staff costs
- Promotion of program
More on what each of these categories means in a minute -- but understanding these categories can help give you a sense of how the organization uses its resources and whether you feel good about contributing to it. Lets look at a couple of individual organizations before we dive further into what these categories mean:
For Projects Abroad, 23% of their spending went to volunteer costs, or in other words "support for volunteers from start to finish". Their project running costs (22%) encompasses volunteer accommodation, meals, transport, etc. Implementation and monitoring of projects, or as we phrased it "staff costs", took up 19% of their spending. Operating and administrative costs were 17% of the total, and promotion and fundraising (awareness communications and advice) took up 19% of their spending.
The not for profit volunteer teaching provider, WorldTeach, has about half of their expenses going towards volunteer support. This includes volunteer transportation, room and board, volunteer stipends, and other volunteer placement expenses.
We defined project running costs to include health insurance for volunteers, orientation, and other trainings. Administrative costs cover administrative expenses for in country and U.S. based staff. Staff costs covers compensation (i.e. salary) for country field staff and U.S. country program managers supporting volunteers.
For volunteer abroad provider GVI, we defined their volunteer costs to cover "volunteer related costs" (as named on GVI's expense chart). For promotion of program, we included both promotion of program and alumni services.
Staff costs covers their supporting operations finances, staff and volunteer recruitment (which could also arguably fall under the "promotion of program" category). Administrative costs is supporting operations re-investment and systems. There was no further definition for "project running costs" but we also decided to include project development in that category.
So what exactly do these mean? Lets discuss these expenses a little further:
Program expenses / Field operations
This covers an extremely broad range of different types of expenses, which is why it almost always accounts for the largest percentage of expenses.
Most well-run nonprofit volunteer organizations allocate at least 85 percent of their outgoing funds to program expenses, meaning that the vast majority of the money that comes in -- from volunteers as well as external sources like donors and grants -- goes toward supporting the in-country program work and making sure you’re able to actually perform your volunteer activities. Depending on the program, these expenses can take a number of different forms.
Program expenses may include:
- Orientation and training
- Stipends (if offered)
- Housing for volunteers/payment to host families
- Transportation for volunteers
- Compensation for local staff
- Local office expenses
- Administrative expenses for local staff
- Health insurance
- Supplies and equipment for volunteer projects
- Supporting community projects and partners
- Bank costs
- Partner outreach
- Local events
- Visas and flights
This may not look like your money is going straight to your host communities or projects -- and not all of it is -- but it makes sense if you think about it that some of your contribution has to help keep the program itself running. After all, if there’s no staff, nobody to give volunteers orientation or training, and no way to compensate host families for providing volunteers with room and board, then there’s no program!
If an organization spends the majority of its resources on program costs, that means that your money is going toward supporting the on-the-ground activities of the program itself -- allowing you to donate your time to your project or organization within a well-organized, structured system.
Okay, someone has to keep things running back at home (and keep the finances in order!), so it’s unlikely that any functional organization will have zero percent spending on administrative costs.
If you’re talking about a large organization with programs in multiple countries and large numbers of participants, there’s obviously going to be a central office and staff that help coordinate all those moving parts, making sure everything runs as smoothly as possible.
Administrative expenses for organizations may include:
- Rent for an office space
- Technology costs (phone, internet, other services) for office
- Infrastructure costs
- Salaries/compensation for management and office staff
- Transportation for office staff
- Published materials
- Financial management (employees, contracted services or software)
- Executive and board governance and expenses
These are all completely legitimate expenses for a functioning organization, so it shouldn’t set off any alarm bells if you see that a small percentage of expenses go toward these kinds of things. However, keep in mind that it's ideally a small percentage -- if you see a double-digit figure allocated for administrative expenses, especially if it’s over 15 percent, you should take a closer look at how this program is spending its money.
Granted, it could be a really large organization, or work in especially remote places that have especially high transportation and insurance costs, but it’s pretty hard to justify spending that much on admin.
Some shady organizations do siphon off a large percentage of operating costs to the administrative side -- essentially keeping much of the money for staff rather than having it go to benefit the communities they’re supposed to be helping.
If you’re concerned about what seem like really high numbers for admin costs, don’t hesitate to ask the program why they’re like that, or even seek out an opinion from someone else in the field (without naming names, of course).
Anyone who has ever worked at an NGO knows what a vital -- and often tedious or nerve-wracking -- part of life this is for such organizations. Most nonprofits, by definition, rely heavily on fundraising, since they’re not allowed to turn any profits.
Even if volunteers do their own fundraising before going abroad to help offset program costs (never a bad idea!), it’s likely that your program has its own fundraising tactics to help support its operations, whether they take the form of grants, events, online campaigns, direct mailings or, who knows, even a bake sale.
Paradoxically, though, fundraising itself isn’t free, which means that if an organization wants to do a good job at gathering resources and maintaining stable operations, it needs to invest in fundraising.
Fundraising expenses may include:
- Costs for hosting events
- Social media expenses
- Direct mail campaigns
- Outreach to donors and foundations
- Direct proposals to donors and partners
It may seem odd that a portion of expenses go toward trying to make more money (which then gets invested in more fundraising to make more money and ad infinitum forever), but again, fundraising is a key component to keeping nonprofits afloat so they can continue to implement the programs that you want to participate in and others want to support.
Plus, more resources that come from fundraising means the organization has a better ability to cover its operating costs, which means in the end that more of your volunteer contribution may go directly to your community, which is the whole point, isn’t it?
Again, as with administrative costs, the percentage of expenses that goes toward fundraising varies significantly between organizations and depends on what other financial resources the program has.
If, for example, the organization has a guaranteed five-year grant that’s helping cover administrative expenses, it may have to invest less in fundraising, since it already has some of its financials accounted for. On the other hand, if the economy takes a downturn or a dependable funding source falls through, they may have to devote more money to fundraising to make up the difference.
What Should This Look Like?
We've already looked at a few volunteer program providers and where their money goes, but we also wanted to take a look at the total revenue and spending habits of some well known not for profits. Below are the (publicly available) revenue data on Habitat for Humanity, Hope International, Amigos de Las Americas, and Cuso International.
As you can see, all of them spend about or less than 10% on administration.
Where to Find This Information
The best place to start is always the program provider or organization’s website. Though it’s true that the limited budget of some nonprofits means their online presence is, shall we say, less than up-to-date, a fair share of organizations do have a section on their sites where they clearly show how they use their (and your) money. If you can access the annual reports, this is often the best way to see a precise breakdown of revenue and expenses and how those are distributed.
Another option is looking at an aggregator like Charity Navigator or GuideStar, which compile financial information about thousands of nonprofit organizations, mostly based in the United States, since that financial information is public record.
These sites provide varying information about different organizations, depending on how much the organizations themselves choose to report, but it’s a good way to get a basic sense of how organized, accountable and transparent a given program is.
Charity Navigator evaluates 8,000 different charities and nonprofits, rating them on metrics of financial health, accountability and transparency, and grading them on a four-star system. The site also has a fun Top Ten section, listing everything from 10 Celebrity-Related Charities to 10 Inefficient Fundraisers.
GuideStar offers members access to annual reports, tax forms, revenue and expense data, listings of CEOs and board members and contact information for organizations.
Transparency is Key
All in all, paying to volunteer abroad is not inherently a bad thing. You just need to make sure that the organization you choose is responsible and transparent about their spending. And not just that, but also make sure they're spending their funds (and your money) in a responsible way. Good luck, future volunteers!