Transparency in the 3rd Sector: Do Charities Need a Rethink?

  • Mark Crawley
  • 08/02/2016
  • 10:30
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  • Adecco Group

Last year alone, I personally convinced people to take a combined £250,000+ worth of salary reductions to come into the charities sector. This is not to mention the many additional benefits enjoyed by private sector counterparts (such as bonuses, private medical insurance and so on).

Transparency in the 3rd Sector: Do Charities Need a Rethink?

 

I’ve spent the last five years convincing people to take pay cuts that others would think unfeasible.

Last year alone, I personally convinced people to take a combined £250,000+ worth of salary reductions to come into the charities sector. This is not to mention the many additional benefits enjoyed by private sector counterparts (such as bonuses, private medical insurance and so on).

However, charities still manage to face a barrage of biased, and often factually incorrect, media campaigns about the way they operate and what they pay their staff. In every case that a charity is singled out, the organisation responds quickly and publicly to defend itself.

This month, I celebrate my five year anniversary with Badenoch & Clark. After a short period in 2011 of recruiting to the London Olympic Games, I moved into our 3rd Sector team and have been leading our Qualified Finance practice ever since.

I’ve seen the sector go through a lot in that time and bad press is nothing new to charities. For years, they have come under fire for paying Executives too much and for years, charities have had to defend their pay.

But it’s not just pay that the sector is attacked for; as we have seen over recent months.

Before Christmas, the True & Fair Foundation released A Hornet’s Nest, which targeted charities about the ratio of money that went towards charitable activities. The issue, when targeting charities with high levels of retail income, such as Cancer Research UK and British Heart Foundation, was that it took into account retail turnover, rather than profit.

Need I also comment on the closure of Kids Company and the negative affect it’s had on smaller charities? I think that’s been talked to death.

Last week alone, there were two further media campaigns against the sector, including an article written by Dan Hodges at the Telegraph, which tried to convince us Too Many of our 'Charities’ are Nothing of the Sort.  In the article, he claims that a charity isn’t a charity unless they stand on the street shaking a tin, which, quite frankly, is nonsense:

Mr Hodges is normally better known in the Telegraph for attacking Civil Servants. So why should we be concerned about what he has to say about charities? Take a scroll down to the comments section and you will see that, as with everything, people have a very strong opinion of charities:

  “I used to give to five charities until I discovered how much their CEO's were being paid”

The reality is, there is a distinct lack of understanding about how charities are run and what they actually do. We are still in a culture whereby many people think charities all operate out of a shed in the backstreets of London and work for free. I can’t begin to tell you how many times I have to explain to people that I don’t recruit volunteers for charities.

To your average donor on the street, all charities are the same. If you ask them to try and explain the difference between Macmillan Cancer Support’s and Cancer Research UK’s operating model, then they would struggle.

Transparency has long been a struggle for the sector and the issue of getting across the message of exactly how your money is spent and the impact it has on the charity’s cause is one that I don’t think has been properly tackled yet. Gone are the days where charities can put a pie chart on their website showing the breakdown of how where your money goes and rely on this to convince donors that it is well spent.

Next month, the Charity Commission is due to carry out its biennial survey for public trust and confidence in charities. With all the negative press about charities over the last year, nfpSynergy already reported at the end of last year that Trust in Charities Falls Again.

In times where the sector is coming under increased pressure about fundraising practices, and with the FRSB’s report following the death of Olive Cooke issued last month, this is a key time for charities.

So What Next?

  • Develop Better Media Relationships:

We have some unbelievable people working within charities and I continue to attract more people willing to make considerable pay reductions to join them. In my opinion, the sector needs to move away from a reactive model and give the public a much better understanding of their work, funding models and operating practices.

The relationships that charities have with journalists is one of the key issues to tackle head-on. The sector needs to get better at using journalists and other media sources to publicise the amazing work that is happening across the sector. Take Save the Children as an example. How many people on the street are aware that infant mortality has halved in the last 25 years as a direct contribution of their work?

Charities need to build stronger links between the sector and the media and give the public the confidence that the world is a better place with their work. Getting more of the world’s press on side is one of the most powerful weapons the sector has in its arsenal and collaboratively, the sector can do a lot to boost positive press.

  • Improved Transparency:

Improved transparency of where money actually goes is a really important, and quite tricky, point as well. I did a quick poll in the office and showed a few of my colleagues three of the UK’s biggest charities’ “How We Spend Your Money” page.   It was Monday morning when I showed them, so you could argue that they hadn’t woken up properly for the week by that point (which is very likely for a room full for recruiters), however the resounding feedback was that it was that in most cases, it was very difficult to understand just where exactly your money goes.

The issue is that most people don't know what "charitable activities" means and won't go fishing through the back quarter of a 40-page annual review to see a full breakdown.  This can create a disconnect between the donor and the charity, leaving the organisation open to question.

There is a real opportunity for charities to better demonstrate the journey of donors’ money and show how they need to spend money to make money. There are some great tools in place and lots of work being done about this within the sector already, although transparency of charities has a long way to go.

As for 2016, I personally look forward to another year of convincing you to take an even bigger pay cut to join this wonderful sector.

Mark is an Executive Consultant within Badenoch & Clark's 3rd Sector & Housing team, with five years' experience recruiting at a mid-senior level within the sector.

If you would like to contact him for more information or advice, please call 020 7634 0389 or email mark.crowley@badenochandclark.com

 

 

 

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