Here is an OP ED piece by the finance director of Oxfam UK.  There is also a response from the UK TaxPayers’ Alliance in the comments section.

From The Times November 27, 2009 “Transparency and accountability are crucial for NGOs”  Bob Humphreys: Opinion

Allegations that a large proportion of the money directed to non-governmental organisations (NGOs) is “lost” to administrative costs are unfounded. While there is always going to be the occasional issue, most large international NGOs run a very tight ship.

If funds raised for aid and development work were being wasted it would be a serious issue and one that would threaten the future of NGOs — and would seriously damage the views of the public that support them.

Running a global charity is an immensely complex task and most organisations are deeply committed to being accountable, efficient and transparent in their finances and the vast majority of money that is raised goes directly to helping people lift themselves out of poverty.

For every £1 we receive, whether from Government or supporters, 90p is spent directly on our emergency, development and campaigns work; 8p is invested in fundraising to generate further money, while just 2p is spent on central administration and governance — a figure that many businesses would be pleased with.

Unless you are running a basic “fire and forget” grant administering charity — with trustees simply signing and sending cheques without further involvement — then you need a full-service establishment that can handle the minefield of legal, operational and financial requirements that come with the job.

From the practical side of aid — assessing need, establishing credible strategies and exercising proper control over the distribution of funds — to the legal and accounting framework behind it, effective development work demands dedicated and sometimes costly resources. Particularly because charities generally operate to much higher standards of transparency and accountability than our “for-profit” peers.

We operate using sound business principles, with the aim of making maximum returns — this allows us to have the maximum impact on poor people’s lives.

Many reports, such as the recent publication from the Taxpayers’ Alliance, in my opinion fail to recognise the highly professional way in which charities operate and how efficiently we use limited resources to raise further funds.

For example, the £60.6 million which Oxfam spends on running our network of shops, brings in £77.7 million; a net income of £17.1 million to support our work. Meanwhile, the £20 million we spent on fundraising last year generated £220 million of income — an extremely solid return on investment in any business terms.

While complying with the legislation and regulation we face is time and resource-intensive, this framework is absolutely necessary to make sure we remain transparent and accountable to British taxpayers and the people receiving our aid.

• Bob Humphreys is director of finance at Oxfam