All over the world, organizations are standing side-by-side with churches to help them in their pursuit of the Great Commission. Few would argue that churches should function totally on their own, without at least *some* help from the organization. Most recognize that the church functions best when it is gathering up insight and assistance from several sources.
So now, the question remains, what should some of these services cost? Which ones have seemingly now grown out of hand? Should the administrative fee be less than 5%? 5-10%? 10-15%? …16-20%
… Over 20%?
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I think most of us would call an admin fee of 10% or less a bargain and 15% or more is spendy. 20% and up is pretty commonly seen as really spendy.
I was once part of a church that boasted of giving 50% of their income to missions, until we on the mission committee finally fought to eliminate the practice – way too many things were getting shoved into the mission budget! So my question is, does something similar happen within our ministries, with lots of ambiguity and maybe some false assumptions or expectations around the question of what expenses count as “admin”?
A Great question and potential discussion. I would love to see this question focus on airfare. I’ve worked for over 20 years in the “non-profit” airfare business. Most people would be shocked to learn how much in hidden profit is added to the price of a “missionary” or “humanitarian” airfare.
I do assistant accounting for over about 7 non-profits (none of whom charge above 12%), and one thing to keep in mind is that the admin fee is not only there to cover the costs of the people hosting the program but also because it is well-nigh impossible to get people to donate to administration. It seems that everyone wants to dictate to non-profits how the money they give should be spent–is that perhaps muzzling the worker? food for thought…
“Moreover, you shall speak to the Levites and say to them, ‘When you take from the sons of Israel the tithe which I have given you from them for your inheritance, then you shall present an offering from it to the LORD, a tithe of the tithe.'” (Numbers 18:26)
So, I’m going to say that 10% is a biblically sound overhead.
I know of one respected organization, Focus on the Family, that budgets 8% for Administrative costs.
With the vote of confidence that their supporters give them, it seems many believers accept what they are doing.
I love Jon’s scriptural answer of 10%. Perhaps I should add that Focus also has another 8% for Promotion costs.
Speaking as someone who has worked on a mission’s committee, additional transparency about this number would be appreciated, to assure a complete picture of stewardship in financial reporting to the congregation.
From our inception in 1994, we ask the missionary to pray the Lord’s wisdom about what percentage they want to return to our mission as a co-laboring cost of sharing the burden and coming alongside their fellow sent ones. It is working for us
This is an important question. I think answers depend on what you are asking. I think that according to ECFA guidelines, there is admin but there is also costs the agencies incurs that is not overhead or admin but is “program” (part of the field ministry). So how people answer might be apples and oranges. Are you asking, what is the acceptible admin + program costs? The type of work matters too: just facilitating a church’s involvement, or doing significant ministry or capacity development on the field to help that church’s involvement matter for the long term? That costs something.
Bob Savage does well pointing out admin costs, overhead costs, and program costs in clarification. Noting that those definitions may vary among agencies, I will speak of them as combined. We like to see total agency fees at 10% or less.
However I would prefer a different paradigm, that of a flat fee /missionary/month. It may be easier to “market/explain” a fee based on a percentage but then the amount collected varies by the living and ministry costs of the field. If the average need is $6000/month and the income needed by the agency is $600/missionary/month, then I am sure it is easier to explain 10% than it is to explain $600/month on a $3000 budget. However, it also seems difficult to explain a $1000/month on a $10,000/month budget.
Also note that a flat fee gives the agency additional credibility as they now have additional incentive to keep the budgets restrained to appropriate levels. After all, if the agency approves a higher budget, then they simultaneously potentially increase their income. This is not to suggest wrong motivations on behalf of the agency, but such a flat fee would eliminate the question. In all fairness to the agencies, if they go to a flat fee then they will need to have regular increases to that flat fee as their costs of doing business and ministry increase. We in the churches would then need to be open, and accepting, to regular increases. OK, so I like flat fees, but maybe percentage based is more “real world”.