Monday, December 11

Anger at MADD in Canada

This weekend the Toronto Star launched a series of scathing articles claiming Mothers Against Drunk Driving (MADD) Canada is not accurately reporting the percentage of expenses spent on fundraising.

Since the organization uses fundraising pitches that say "83.6 per cent of your donation is spent directly on MADD Canada programs," the newspaper was outraged when it calculated that only 19 cents of every dollar goes to victim services and the fight against drunk driving. The Toronto Star's investigation found of the almost $12 million raised - more than $6.1 million was spent on fundraising and $2.7 million spent on salaries and administration.

At the heart of the controversy is the formula MADD uses to allocate the cost of paid fundraisers through a word count method. This involves dividing the costs of fundraising letters and scripts between education and fundraising based on the percentage of words used to ask for money.

MADD chief executive officer Andrew Murie defends the expenses, saying the paid telemarketers and door-knockers are actually performing good works because they educate the public as they ask for cash.
Charity in Canada is regulated by the Canada Revenue Agency's Charities Directorate, run by director-general Elizabeth Tromp.

This week, the Star told Tromp that MADD was counting the work of professional fundraisers as charity. Tromp is not allowed to comment on individual charities but she said the practice is definitely not allowed. "When a professional fundraiser has been retained, it can reasonably be inferred that the intent of the expenditure is fundraising."
The paper uses quotes from the founder of MADD Canada, former volunteers, and families drunk driving victims to fill out it's negative portrayal of the "fundraising machine." It even contacted 100 donors of MADD on its own! The Star ran a follow-up article with MADD's response on Sunday and today it ran a letter to the editor that was equally critical of head office salaries.

Regardless of whether fundraisers think this was an unfair hit job on MADD... the question this story drives home is the extent to which donors understand the widespread process of "joint allocation" used in Canada or the USA. Personally, this does not seem like a question of whether everyone is doing it (they are) or whether auditors allow it (they do), but whether your donors know how and why your organization uses this accounting methodology.

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