"How much do you spend on admin?" we like to ask our charities. The organizations that excel on this measure are often those that merely channel funds to other groups, without maintaining a presence on the ground. The PSHF by contrast has staff that act as business advisors while they are evaluating tiny livelihood projects being planned by poor families. Is that admin or is it closer to serving the poor? 10% is deducted from all donations, as a contribution to overall running costs, but this ratio is only possible because a handful of donors give specifically to the field expenses and salaries of the organization. Richard supports himself teaching, even though he spends most of his time on PSHF work.
Another measure of effectiveness for micro-loan charities is the repayment rate, which for the PSHF runs at between 85% and 95% depending on the area. The repayment rate tends to be worse if we lend to the most impoverished, as they are more vulnerable to anything going wrong. Despite the risks, the PSHF continues to offer loan assistance to the very poor and many of them have proved to be very faithful in meeting their repayment commitments.
Another measure the PSHF likes to keep an eye on is the average administration cost of a project. This is calculated by dividing the total salaries and expenses by the number of projects. This can turn out to be quite high simply because a tiny loan to give a poor family an initial taste of managing inflows and outflows of funds can take up as much staff time as a loan for a group for a much bigger amount. It is nevertheless important to weigh up the costs and benefits of helping individuals as opposed to groups so that we maintain a balance between quality and quantity of assistance.