Focus on Charity Transparency - Part 1

Focus on Charity Transparency - Part 1

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Why isn’t the sector being more transparent about fundraising costs, asks Jenny Ramage.

“The march towards greater transparency is unstoppable. There is no escaping it”. So warns Donald Steel, associate director of reputation risk management company, RL Expert. Formerly chief media spokesperson for the BBC, Donald is well versed in handling the PR for organisations for whom public trust is paramount. Charities, he says, can no longer simply opt out of being more transparent, “because otherwise they will be dragged into it, kicking and screaming. The public demands it”.

There are still huge gaps in the public’s understanding of charities and their associated costs - and Lucy Gower, innovation director at Revolutionise, thinks there is a big piece of work that needs to be done around this. “The general public need to be educated about how charities work. They need to understand that fundraising isn’t just done by volunteers, and that you have to invest in order to raise money. So as a sector we need be really clear about how we raise funds, and why we do it this way.”

Not much help

The rhetoric supporting this view is doing the rounds, but it's mostly just talk; very little positive action has been taken to date. Probably because cracking the issue is easier said than done; after all, charity costs can be quite complex to communicate.

Only a small handful of organisations have been vocal in the media about their costs - Comic Relief, for example, which proudly claims that one hundred per cent of public donations goes directly to the cause. This, of course, does little to alleviate the pressure on the sector as a whole; very few charities are in the privileged position to have enough income from other sources to cover their overheads.

It’s a similar story with chief executive salaries, says Lucy. “When the CEO salary debate came up, a few charities piped up and said: ‘Hey, our CEOs only get paid this much’, and that didn’t help the sector overall. How about saying: ‘Hey, our chief executive does an amazing job at leading an organisation that exists to drive massive change, and we’re really proud that we’re able to pay him or her this amount to do such excellent work’?”

Speaking out

Rob Abercrombie, director of research and consulting at NPC, thinks individual charities have a role to play in educating the public. “I understand people not being brave enough to depart from what’s become the norm, particularly when under huge pressure internally to hit targets, but those that can find the courage and the means will probably reap the rewards in the medium to long term. They may well gain a competitive advantage by being the first to approach the issue of CEO pay, for example, differently.”

But who is prepared to be the first to come forward? Joe Saxton, driver of ideas at NFP Synergy, thinks the reticence of individual charities is understandable. “If you have people worried about how much your CEO earns and you stick it easy to find on your website and no one else does the same, everyone gets outraged that your CEO gets paid £100k; so why would you stick your head above the parapet and be more transparent when nobody else is doing it?”

Joe suspects only collective action is going to be effective, and that the sector “needs to work much harder to engage people on why it’s good that charities spend quite a chunk of money on fundraising and on salaries”.

Who should own the space?

One of the problems with the collective approach, and indeed one of the reasons why little progress has been made to date, is that no one really seems to own this space at the moment.

“That's one of the big challenges” says Joe. “There is not a director of communications for the charity sector. While there has been a rather long-running attempt to get something going, sadly it’s not come together as much as it should. I think there are probably half a dozen players that should be involved, such as CharityComms, the IoF, NCVO, and some of the big charities who spent chunky amounts of money. It's got to be a real cross-sector activity”.

What’s clear is that someone is going to have to take the bull by the horns, step forward and show some leadership. Of course, that’s not the end of the story - because it still leaves the question: to what degree do we need to be more transparent? Moreover, exactly what is it that we need to be transparent about? Find out in tomorrow’s blog post.

To find out more, see part two of our focus on transparency in the charity sector, and read about what Charity Choice is doing to help bust charity spending myths with their new charity financial reports

Jenny Ramage is editor of The Fundraiser

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