Charity Fat Cats, and the Disappearing Cream…

Life in the third sector is tough.

Here I sit, a charity employee, relaxing in my large leather armchair, in my corner office, worrying about my company limo no longer being this year’s model, finding out that the UK is becoming less generous.

A report out today from the Charities Aid Foundation has confirmed that the UK has dropped from the 5th to the 8th most generous nation in the world. In 2011, 72% of us gave money to charity, down from 79% in 2010.

One of the more worrying criticism raised recently has been whether giving to charity is value for money.

A growing criticism of charities in these straightened times is the complaint that charities inefficient, self-interested and wasteful of donations.

Is that fair?

Well, there was some interesting research conducted in April 2010 by the Small Charity Directory on the percentage of donations that directly to charitable causes?  There were some encouraging answers.

Oxfam stated that for every £1 given, 80p is spent on emergency, development and campaigning work; 11p on support and governance; and 9p invested to generate future income.

The British Heart Foundation stated that for every £1: given, 56p is spent on medical research, 27p on prevention and patient care, 16p on income generation, and 1p on governance and office running costs.

The Red Cross stated that for every £1 given, between 85p and 90p is spent on direct charitable work, with the remaining 10p spent on governance, management and central support costs.

So the problem is perhaps one of perception rather that reality.

However, it is important that you charity can demonstrate value for money, as a recent Guardian article argued. So what should your charity do?

  1. Review your management accounts, and check that there are no inefficiencies in your operations.  Look for areas where you are being potentially wasteful, and try to cut down as much as possible.
  2. Consider other solutions to reduce waste.  Could you collaborate with other similar charities?  Could you share office costs or admin services? Would a merger help further your mission?
  3. Explain to your donors and supporters how you are spending their money.  Transparency and trust are so important in the third sector, and once trust is lost, its hard to regain.  Proactively show the public how you are spending their money, and what has been achieved.

Now, I wonder how much my Christmas bonus will be this year?…

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One thought on “Charity Fat Cats, and the Disappearing Cream…

  1. […] about the extent of charity overheads, the level of charity’s chief executive pay and remuneration, and the salary paid to William Shawcross, the Charity Commission […]

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