Help for help

I think that the key fact is that charities work most effectively when they function with volunteer staffing, which is fine for those who are not time-poor. However for busy benefactors who want to perform generous actions, givedonations to aid the poor, ill, or helpless; todevotetheirlifetocharity, then having an organisation with an ultra low-cost structure is desirable.

There can be no denying that supporting charity benefits not only the recipients, but also the donors; that donor value is happiness.

A number of years ago Arthur Brooks, American social scientist, musician, and president of a conservative think tank, and who is best known for his work on the junctions between culture, economics, and politics, wrote the following in the New York Sun newspaper:

A number of studies have researched exactly why charity leads to happiness. The surprising conclusion is that giving affects our brain chemistry.

For example, people who give often report feelings of euphoria, which psychologists have referred to as the "Helper's High." They believe that charitable activity induces endorphins that produce a very mild version of the sensations people get from drugs like morphine and heroin.

Charity also lowers the stress hormones that cause unhappiness. In one 1998 experiment at Duke University, adults were asked to give massages to babies — the idea being that giving a baby pleasure is a compassionate act with no expectation of a reward, even a "thank you" — in return. After they performed the massages, the seniors were found to have dramatically lower levels of the stress hormones cortisol, epinephrine, and norepinephrine in their brains. The bottom line from all the research on giving is that it is not just good for your favorite cause; it's good for you, too.

For relief from stress and depression, it's probably more cost-effective than whatever your doctor might prescribe. For getting a little high, it's not illegal, and a lot less fattening than booze.

That’s what a lot of us feel when we donate, but unfortunately our donations are not as effective as we would wish or believe. The way charities operate and are regulated in Australia finds them as businesses with high overheads and low profits.

The function of any business is to make a profit; it’s the nature of that business which shapes the cost of obtaining profit.

For many years, I operated a film and television production company in which we used to apply a mark-up of around 30%, appropriate for what was essentially the creation and supply of bespoke product with a low turnover. We would negotiate lower mark-ups for those clients who gave us regular business, and for whom developmental costs could be amortised over a number of productions.

This is in sharp comparison to high turnover mass-market retail businesses which often factor in a 1.5 – 5% mark-up, allowing them to cover overheads yet return a satisfactory profit.

But the simple fact remains “you have to spend it to make it”.

What is different about charities is that there is no end product. They exist purely to distributemoney, time, or labor for others without being rewarded in return.

Cricketer, Shane Warne, recently admitted to Mal Faircloth of AAP that he was “disappointed” with the recent performance of his charity, The Shane Warne Foundation.

This was after it was reported it had donated an average of only 16 cents of every dollar of $1.8 million raised from 2011-2013 to institutions that care for sick and underprivileged children.