Direct Relief seeks to be efficient and frugal in all organizational activities, including fundraising activities. Since 2007, all of Direct Relief’s fundraising expenses have been paid by the earnings from a generous, unexpected bequest received that year and several other such legacy gifts since. This includes earnings that may accrue on restricted contributions. By long-standing internal policy and practice, any such earnings are deemed to retain the same restriction as the contribution. This is not required under Generally Accepted Accounting Rules, but Direct Relief believes it right and proper to do so to ensure that the intended purpose of a donor’s restricted fund is honored.
Because Direct Relief is able to cover its modest fundraising expenses in this manner, zero percent of donated funds go to the organization’s fundraising activities.
Although not paid by donors’ gifts, Direct Relief’s fundraising expenses are, of course, disclosed and reported as required. Fundraising expenses average about 2 percent of the total cash revenue received by Direct Relief annually.
It’s important here to emphasize the distinction of cash revenue in relation to fundraising expenses because Direct Relief also typically receives significant donations of medications and supplies, many of which have a high financial value. Such in-kind donations must be recorded and reported as revenue. Indeed, the vast majority – typically more than 90 percent — of Direct Relief’s annual total revenue is in the form of in-kind medical donations. In recent years, the financial value of in-kind medical donations has exceeded $1 billion annually.
Although such in-kind donations are revenue, they obviously cannot be and are not used to pay fundraising expenses. So, it can be both confusing and misleading to present the organization’s fundraising expenses as a percentage of the vastly larger total revenue, which includes in-kind medical donations, than the cash contributions it receives. That’s why we call special attention to this.
Direct Relief understands from long experience that members of the public are often keenly interested in the basic question, “How much of my cash contribution will you spend on fundraising?”
In Direct Relief’s case, the answer is “Zero” because, as noted above, the organization is very fortunate to have the means to pay such expenses with funds previously received by bequests.