Larger Charities taking too big a cut of the donations

A recent report by the True and Fair Foundation claims that many UK Charities pay out less than half of the donations they receive. A lot of these big charities are becoming pseudo-corporations with very expensive executive staff, and with much of their income put into decidedly corporate activites - like investments and real estate portfolios. A surprising number of charities gamble their fundraiser’s efforts on a variety of incongruous financial schemes.

Obviously there are some costs associated with running a charity, and it’s unreasonable in most cases to expect that 100% of your donation gets paid out into charitable activities. Charities do need to employ people, they need to hold fundraiser events, and they need to advertise their campaigns.

Exactly how much of a percentage spent vs donations received is deemed reasonable is up for questioning though. I can’t really begrudge Cancer Research UK that much since they paid out nearly £423 million in their last financial year - even though this amounts to just 64% of their income; i.e. they take 36p out of every pound in expenses - is that fair? Yet we read about charities sending significant numbers of staff on luxury research missions - 5 star all the way, this is surely an irresponsible way to spend their income.

For several years now research groups have tried to get hard answers on how much exactly charities pay all their executives, which most of these charities still refuse to answer.

The True and Fair Foundation has recently published the following list:

Percentage % of Income spent on Charitable Activities for last 3 financial years (Actual amount paid out last financial year)

• 1% - Lloyd’s Register Foundation (£14,490,000)
• 3% - The Racing Foundation (£1,146,153)
• 8% - The Motability Tenth Anniversary Trust (£4,093,000)
• 24% - Consumers’ Association (£22,796,000)
• 25% - Sheffield City Trust (£17,021,000)
• 33% - The Grace Trust (£29,874,716)
• 46% - British Heart Foundation (£113,700,000)
• 46% - Sue Ryder (£42,585,000)
• 48% - Age UK (£83,956,000)
• 57% - Oasis Charitable Trust (£151,935,000)
• 60% - The Royal Horticultural Society (£47,641,000)
• 63% - Dogs Trust (£57,185,000)
• 64% - Cancer Research UK (£422,700,000)
• 64% - The Guide Dogs for the Blind Association (£56,400,000)
• 64% - Shelter, National Campaign for Homeless People (£39,541,000)
• 64% - The Royal National Lifeboat Institution (£122,200,000)
• 65% - Marie Curie (£105,585,000)

I believe this increasingly needs to be a factor in who you choose to donate to - i.e. where exactly is your money going, and how are many of these charities really functioning and how ethically - financially and otherwise. Some of them are evidently not entirely ’Not for Profit’ except in their tax returns. When executives profit more than the charitable works, something is obviously badly wrong with the system. Few countries have as many charities as the UK, and in the wake of the Kids Company scandal, it is quite evident that the regulations currently in place are too easily open to abuse.

With all these things going on, it has become more important than ever for charities to be truly transparent and to openly reveal exactly where all the money is going. This does not appear to be happening at all - many of these charities seem to be more secretive than the supposedly more unethical hedge funds.

In the absence of full disclosure we should surely only be donating to charities who account for every penny they spend. Charities like Humanity Direct - where 100% of the donations go directly into funding operations for the patients listed on the site.