Hunts and Cambs 01223 233047
Peterborough 01733 553166

Hunts and Cambs 01223 233047
Peterborough 01733 553166

What's going on with charities?

Can we trust charities in the light of recent scandals?

 
There is no denying that charities have had a rough time recently.  In a difficult economic climate when donations are hard won, there have been a number of scandals which have rocked the public's trust in organisations working on behalf of their favourites causes.  First some charitities were found to have been employing dubious practices to coerce donors into signing up to monthly donations of ever increasing amounts; then some were found to have been selling personal data to dubious customers who then took advantage of their good nature and even defrauded them of savings; then questions were raised about how donations were spent in terms of lavish offices in the capital city, extortionate appearance fees for celebrity endorsement and morally questionable investments; before the latest nail in the coffin of goodwill for many in the shape of sex scandals in Haiti and The Presidents Club.  Controversy often surrounds money, but it smarts a little more in the third sector because we expect those in the business of 'doing good' to be purer than pure and on a morally higher plane.  

 

Are we suffering from compassion fatigue?

The financial crisis has forced us all to look at our spending habits closely and we expect the same frugal and analytical approach to charity spending.  Where charities appear not to be making the most of our 'hard earned pennies' we begrudge having given to them and are increasingly inquisitive about how our donations are being spent.  Even if a prime-time advertisement will generate revenue at levels of several times the investment, we baulk at such huge outlay in comparison to our personal budgets.

Fundraising is no longer a warm and fuzzy endeavour.  Many charities employ professional sales people and donors find it increasingly difficult to decline invitations to donate larger and larger sums.  Images and appeal wording is used to guilt the viewer into giving, and telephone and door to door campaigns mean we focus our attention on our blessings in comparison to those in need.  Such tactics are new to the older generation, but younger people, who have grown up with such marketing are largely immune to its effect and are less likely to be persuaded into giving anything but very small amounts.

As with globalisation in any sector, donors are also very brand conscious, preferring to give to names that are known and trusted, rather than smaller charities, putting further pressure on less prominent organisations.  In fact in the UK, the largest 0.0000003% of charities receive 80% of all donations.  As charities become larger, their overheads and reserves increase, and many find themselves criticised for administrative spending and large bank deposits, whilst being under increasing pressure to have processes and procedures to ensure good governance and limit abuse.  Most need considerable reserves in order to fulfil contractual and moral obligations and prepare for crisis scenarios.  It's a tough balancing act for CEOs to manage.  If you're thinking, "But they are well paid to manage it," it's worth noting that salaries in the charitable sector are typically 40% lower than in the private sector, so it's not always easy to recruit someone with the right skills and experience for the level of responsibility they are managing, and Trustees (the board or the charity) are usually totally unpaid, making it even more difficult to find the right people.

How are charities responding?

In the 'live for the moment' culture of the younger generations, 'give for the moment' is the new trend in giving.  Millennials are less likely to set up a direct debit and donate to one or a few charities for life.  Instead they respond to visual media and social media, inspired to make one-off donations by innovative campaigns.  This means charities have to work much harder for their cash and invest much more in unusual content on social media in the hope that people will then market your cause for you in their likes and shares.  Giving needs to be easy.  Younger donors like the feel good buzz of pressing the donate button, so will give little and often, rather than large and infrequently.  They often need a physical reward for their giving as a member's badge for their cause.  Red nose day is an example of this, where the merchandising element has grown from just the nose itself in the eighties to a whole range of clothing, banners, car adornments, and household objects, but this increases the costs of the organisation and diverts focus away from its primary function.  Millennials need to be seen publicly to be philanthropic, and able to post images of their involvement to show that being part of the 'giving gang' is fun and cool.  Much can be learned from the success of the 'ice-bucket challenge' which raised $115 million for sufferers of Lou Gehrig's disease.  

Unlike other businesses, which in the light of scandal, rebrand, charities refresh and review.  They do not have a product or service to sell, other than the feel-good factor, and there are many competitors fighting for their custom.  If charities find issues within their organisation, they need to fix them, and promptly, or they will cease to exist, to the detriment of society as a whole.  

Thankfully, the government and charities commission have recognised the need for increased governance in data protection and the new GDPR legislation coming in to place in May 2018 will prevent all organisations from misusing personal data as the penalties for contravening it will be harsh.

 

There are approximately 165,000 charities in the England and Wales, with a total annual income of nearly £65 billion.  

However, 40% of those have an annual income of less than £10,000

If you are losing faith in some of the larger charities and their practices, it's worth remembering that in any organisaion of that size and turnover, there will be some staff who break the rules, act unethically and commit crime, but it doesn't hit the headlines because it is so commonplace.  However,  the majority of people working with and for them are good, well-meaning ethical and respectable people, who work tirelessly because they believe passionately in the cause.  Particularly in smaller charities, many are volunteers who will have personal experience of the issue and desperately want to make things better for others.  Withdrawing support from charities does not punish the charities as much as the people they are there to help, which undermines your reason for giving in the first place.  

However, if you are unable to come to terms with the behaviour of your favourite large charity, why not go back to grass roots.  Charities are accountable and publish their accounts annually for public scrutiny and most charities will update interested parties on their activities, successes and challenges.  Look at their websites.  What can you learn about how they operate?  How are their funds spent?  What public benefit do they provide?

CCC is proud to be a non-profit making organisation.  Each year, any excess generated from providing chargeable mental wellbeing services to local businesses is directly used to provide subsidised affordable counselling for those in the area who need support and would otherwise not be able to access it.  As with most smaller charities, CCC benefits from the work of passionate, committed individuals (largely on a volunteer basis) running the charity which provides exceptional results on very limited funds.  CCC has been operating since 1978 and with the support of local businesses and individuals, hopes to be operating in another 40 years.  

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