CLWR - Canadian Lutheran World Relief

Administration Costs: How much does CLWR spend on administration?

One of the regular questions CLWR staff responds to is "How much does CLWR spend on administration?"

The question is asked because many Canadians view "administration" as an evil word. It carries with it a sense of abuse and waste. However, administration is a necessary and valuable part of any organization. Without administration who would answer the phones or respond to questions or even make it possible for your donation to get where it's supposed to go?

The real issue is not whether administration is good or bad, but what is reasonable when it comes to administrative costs. The Canadian Revenue Agency says this about administration:

In the course of carrying on its charitable activities, a registered charity can devote some of its resources to management and administration (e.g., occupancy cost of office space not used for charitable programs, salaries paid to individuals that are not directly involved in the delivery of charitable programs). Management and administration expenses are not considered as an expenditure on charitable activities and therefore do not count toward meeting a registered charity's disbursement quota.
A charity must disburse at least 80% of its donations on charitable activities - administration is not included as a charitable activity. The Canadian Revenue Agency therefore allows charities to spend up to 20% of its donations on administration and fundraising.

In the latest reports to the Canadian Revenue Agency (2004), Canadian Lutheran World Relief's administrative costs amounted to 2% of its total income.

How does CLWR compare to other agencies?

Canadian Lutheran World Relief : 2% (2004)
Care Canada : 2% (2004)
Mennonite Central Committee : 4% (2003)
Red Cross : 5% (2003)
Oxfam : 6% (2003)
Samaritans Purse : 6% (2003)
World Vision : 6% (2003)
Foster Parents Plan : 8% (2004)
UNICEF : 8% (2004)
Development and Peace (Roman Catholic) : 11% (2003)

One must be careful not to judge one organization better than another based on these figures alone. Although "administration" may sound like a simple category, each organization may interpret it differently.

More information about the finances of organizations like CLWR can be found at http://www.cra-arc.gc.ca/tax/charities/menu-e.html or by requesting a detailed financial statement directly from the charity in question.