With the federal government announcing a desire to double charitable donations by 2030, Stephen Long examines the potential inefficiency & inequity of relying on charities, rather than governments, to provide essential services.
It’s one of the feelgood stories of the summer.
Every year at the New Year’s test match, tens of thousands of cricket fans don pink and give money to the McGrath Foundation to fund free breast care nurses to support individuals and their families who are experiencing breast cancer.
The charity, founded by the famous bowler Glenn McGrath and his wife Jane before she died of breast cancer, is almost universally lauded and raises millions for its cause.
But its own financial accounts raise questions about whether it is an efficient way of providing essential health care.
In terms of the money The McGrath Foundation receives from individual and corporate donors, it spends more on fundraising, marketing, and administration than on funding breast care nurses.
Last year, it spent around $8.8 million on “Foundation funded breast care nurses”, but more than $9.1 million on fundraising and marketing, and a further $2.2 million on administration.
In 2022, the charity spent less than $6.2 million directly funding breast care nurses, but more than $9.5 million on fundraising and marketing.
In 2021, it spent just $4.5 million on its “Foundation funded breast care nurses programme,” while fundraising and marketing expenses in that year were $6.2 million.
All up, the McGrath Foundation seems like an expensive way to fund an essential public service.
You wouldn’t know this from reading the promotional material in the foundation’s annual report.
It claims that last year “68 cents in every dollar spent went directly to our nursing program.”
But that figure hides more than it reveals.
The 68 cents in the dollar figure is only true when you include government funds, which pay for most of the breast care nurses the McGrath Foundation provides.
Government grants are the McGrath Foundation’s largest source of revenue, accounting for nearly 40 cents of every dollar the charity gets, and it is contractually obliged to spend all this money on breast care nurses.
Strip out the government funding, though, and the share of revenue the charity spends on breast care nurses doesn’t look nearly as healthy.
Aside from government grants, just 38% of the Foundation’s income last year went to funding breast care nurses, and in 2022, less than a quarter.
In 2023, governments spent almost twice as much money on “McGrath Foundation” breast care nurses as the charity outlaid from its own fundraising efforts; in 2022, the government contribution was more than double.
The foundation doesn’t employ the breast care nurses who work under its banner. They are in fact employed by local area health services. The charity merely pays their salaries – from money it gets mostly from the federal government, with some funding from Queensland and New South Wales; a complicated and circuitous model.
In effect, the McGrath Foundation is an outsourced government service provider, linked to an expensive charity arm with large overheads.
The foundation’s workforce of more than 60 people — top heavy with marketing, media, PR, and fundraising professionals — cost more than 7 million dollars last year, nearly as much as the foundation spent on nurses out of its charitable fundraising.
Yet such quibbles are unlikely to dent public support for the McGrath Foundation.
Understandably, there’s enormous support a charity, raising money for a noble cause, spearheaded by one of the world’s greatest fast bowlers in honour of his beloved late wife. Neither McGrath nor any non-executive Board members are paid for their work for the Foundation.
It is a heart-warming narrative and as Cricket Australia’s official charity for the “pink test,” the McGrath Foundation enjoys huge, favourable media coverage.
Its corporate sponsors include big pharmaceutical companies, big oil and gas, alcohol interests and gambling. They gain kudos from being associated with the brand.
Corporate and individual donors also get to claim tax deductions for donations, indirectly adding to the costs government faces from bankrolling this outsourced service provision. This may well be a win-win for the charity and the sponsors – but it’s an expensive and inefficient way to fund a vital service that people might well expect government to provide.
The counter argument is that without the charitable efforts, and the nudge the foundation has given to government, there wouldn’t be nearly as many breast care nurses out in communities.
But it’s also possible that such a foundation can motivate state governments to vacate the field; why bother funding this vital public health measure when a charity will do it for you?
There is a broader policy context here. The Federal Government has announced it wants to double charitable donations in the next seven years.
Assistant Minister for Competition, Charities and Treasury, Andrew Leigh, says it “will be working on all fronts to double giving.”
Certainly, philanthropy has its place – but not in allowing charity to supplant the state in supplying essential services, especially when government can do so cheaper and more efficiently.
There’s no doubt Glenn McGrath, his late wife’s close friend Tracy Bevan, and others associated with the McGrath Foundation, have a genuine passion for improving care for women with breast cancer.
Their success at raising awareness about the issue is indisputable and there is no question about the quality and essential nature of the service it provides.
Whether it is best way to fund critical public health care is another question – one the federal government would be well advised to consider as it embarks on its push to expand the charity sector and voluntary giving.
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