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Acu-men on a mission; why we need a simple way for the public to know what a charity spends on its cause

It’s time the sector stopped huffing and puffing and bit the bullet. The public has no easy way of knowing whether a charity is spending enough of its income on its mission, nor whether that money is doing a good job. 

It’s time the sector stopped huffing and puffing and bit the bullet. The public has no easy way of knowing whether a charity is spending enough of its income on its mission, nor whether that money is doing a good job. 

This matters because the evidence is overwhelming; the biggest worry from nfpSynergy’s research with the public is whether too little money goes to the actual cause. People’s second largest concern is being unclear on how donations are spent. Much research, including our own, has also flagged whether donations are well spent as a major concern for the public.
 
Yet we as a sector do nothing to make it easier, except wring our collective hands and say ‘how complicated it is’, ‘what is admin?’ and ‘it should be impact that is measured’. 
 
My conversion to the cause of simple metrics came about a month ago. A charity rang me and asked me to buy some of their raffle tickets. As the charming woman tried to sweet talk me into giving, I looked them up on the Charity Commission website. Their finances were shocking. Out of an income of £1.6 million, they spent only £800k. Out of the £800k, just £105k was spent on ‘charitable activities’.  So, less than 7% of their income went on the ‘cause’. Do I know that because the Commission’s website flashed up the warning bells when I looked at their summary data? Not at all. I had to download their full accounts and finally found the data on page 7.  I didn’t donate to them.
 
My question is this. Are we really happy as a sector for charities to put in such a poor financial performance? Will we collude through inaction and allow it to be very, very difficult to find that out?  How many other charities are there whose conversion of donations into cause is equally poor?
 
I don’t propose anything too radical to start with. Just a few icons on the Commission website, so that if I want to look at the financial details I could see how much money is spent on charitable activities at a glance. Perhaps a big tick on that front page indicating that a charity has spent more than half of its income on charitable activities and a big cross if it hasn’t. That would be a start.
 
The apologists for opaqueness have all sorts of reasons why this isn’t a good idea. Their strongest argument is that charities are about impact, not trite percentages. That’s true. A simple metric that indicated that a charity had a real impact would be amazing. Is there a single charity with a measure of impact you can remember? Think hard and name one.  The impact reports that many charities produce are as impenetrable and unread as their annual reports. Any message on impact needs to be put across in 15 words or 15 seconds in today’s multi-tasking, multi-message world. 
 
The problem with the ‘it’s all too complicated’ justification for non-disclosure is that it helps no one.  Doing nothing reassures no one that their donation is well spent. Indeed, it almost certainly does the opposite. Our research at nfpSynergy shows that the public think charities spend around 39% of their income on admin, while they see an acceptable amount as more like 17%. The public doesn’t assume everything is rosy with how charities spend their money when left to their own devices; quite the opposite.  
 
We need to help the public understand how their donations are spent. Easily. Quickly. We could do nothing, but that doesn’t treat the public, donors or beneficiaries with the respect they deserve, nor build their trust in charities and what they do.
 

Joe Saxton

 

Want charities to be an open book? Or do you a rebel against this cause? Leave a comment below.

 

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