Charity issues

Charities – Volunteer more clarity on your finances please

IMG_8368Charities in the UK have a long tradition, based on selfless giving and care for the sick, needy, vulnerable and poor. The scope of what a charity can become involved in has broadened over the centuries,  to include education, arts, culture, sports and a potentially wide spectrum of recreational pursuits.

Charitable status conveys certain advantages particularly from a tax perspective but also represents a magnet for donated funds from the public, grants from a plethora of institutions and foundations as well as government support. This implies a responsibility on the charity to act with integrity and transparency in its operations; something which is not necessarily so evident, or required, in corporate commercial enterprises.

The definition of a charity is simple. It is an institution that is set up for “charitable purposes” ( defined within its constitution) and for “public benefit”. The responsibility of the trustees is to ensure that the resources are directed towards achieving the “charitable purposes” and that the beneficiaries are for the public – and that any private interest is “incidental”

For those charities that are incorporated then there are reporting rules around financial statements and these are lodged with the Charity Commission and Companies House. For many people these are technical documents and are little read. There is no requirement for a clearer, transparent publication that tells the public more about the organisation, who is funding it, how much people are being paid, and whether they are pursuing the charitable purposes, and whether the resources are used for “public benefit”.

There are charities whose  purposes are influenced by the source of funding, and the demands of the funder and their defined scope has slipped away from the core intent. There are organisations which support salaried people, and private interests which are not “incidental” to the charity, and where external influences, and politics are too influential in its running. These charities have crept too close to commercial enterprises where survival is the aim, and the “benefit” is principally for the employees. In some cases the core charitable purpose has become secondary to this objective of providing employment for the staff.

Some charities are run with exemplary ethics, and financial prudence, some, less so. There should be no secrets with the finances of a charity, no need to be coy about being open, and transparent. Charities should not be about just doing enough to be legal, it’s about inspiring confidence with the donors and the general public, and demonstrating that their only focus is the pursuit of the purpose, and the value to the beneficiaries.

My challenge to any charity is to post on their website, a simple report that tells the public:

Who funds you?

  • Where are the main sources of funding from ( by name, connection), and how much, between restricted, unrestricted, capital and operational.
  • The clear link with the charitable purposes.

Where is the money spent?

  • Between main projects, programmes, split of direct, and indirect costs – and pure administration
  • The clear link with the charitable purposes.

Who is personally benefitting financially?

  • Salary details, and other payments to all senior officers, including other family ( or connected parties)  members in the charity.
  • Significant monies paid to other individuals who are not officers.

Key performance statistics

  • Showing benefit delivered to the public in line with charitable purposes, not just activity. ( e.g. people helped not leaflets distributed)

Who are the Trustees?

  • What other formal positions do they have inc political parties, local authorities and related organisational interests

Summarised accounts

  • Income each year ( excluding capital grants)
  • Expenditure each year ( excluding capital purchases)
  • Cash at bank
  • Level of unrestricted reserves.

Public scrutiny

  • The charity should receive questions from the public about its operations and be clear and simple in providing responses to legitimate questions.

The above information should be readily available from within the charity. Cost should not be an issue and publication can be on-line.

Who will be the first charity in Derby to volunteer more transparency on our money?

2 replies »

  1. Agree with your premise Russell, except I would be much harder on them. The sole purpose of the biggest charities is raising money, and then more money, and yet more money. They appear to show little or no interest in spending it on the original reason for their existence. Nor do they make any noise towards that end. They are more like multi-national companies than charities. In fact, I deem them all to be total failures in as much as not one of them has ever gone out of business because they have achieved their aims, which is what they should be striving for. Too many cushy little numbers involved that’s why. Nice little well paid career paths with loads of street cred, no hard work and a life-style their intended recipients can only dream about. What pisses me off even more though, the stupid public have fallen for it hook, line and sinker. The amount of money they throw at these bloodsuckers is staggering. Just goes to show you can fool some of the people all of the time.

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