The Charity Sleuths

What the Intelligent Giving researchers are uncovering, and whose turn it is to make the tea

Monday, June 26, 2006

What’s £700,000 between friends?

After going through more than 150 charities’ accounts, it would be reasonable to expect to see the odd error. A typo, a misspelling... these things are easy to forgive. Indeed, it is almost comforting to know that people, rather than machines, produce these reports.

However, this generous approach cannot accommodate some glaring errors I have found recently.

£10 million error

FORCE (Friends of the Oncology and Radiotherapy Centre): their accounts (due, I think, to a spreadsheet error) miscalculate by precisely £730,535. Bearing in mind that they spend just over £1 million per year, this amount is rather large.

However, it pales in comparison with the South England Conference of Seventh-Day Adventists. By consistently missing out a ‘1’, they understate their unrestricted funds by a prize-winning £10,000,000.

These errors do not directly reflect on the charities’ work. However, they are vexing to researchers, and must be more than a little concerning for donors


Wednesday, June 21, 2006

It could all be so simple...

One of the recommendations made in the Statement of Recommended Practice (SORP) 2005 - the accounting guidelines issued by the Charity Commission - is that charities disclose the economic value of the contribution of volunteers. Of the 300 or so charities that we have reviewed so far, perhaps four have done so.

We have come across at least two different protocols for calculating how much volunteer contribution is worth, so why don't charities make use of them? Does anyone know?


Friday, June 16, 2006

Charities that can't count

We have now reviewed a wide range of types and size of charities: over 300 to date. We can therefore report with some authority that, on the whole, their Annual Reports and Accounts are rubbish.

It is not just us who think this. Our contacts throughout the voluntary and commercial sector agree that the general standard of charity financial reporting is woeful. A former Financial Times analyst compares the charity accounts of today with company accounts he was analysing decades ago in... Jakarta.

One of our subjects had miscalculated its accounts by £700,000, and while mistakes of this magnitude are not common, rarely a day goes by when some inconsistency or error doesn't rear its befuddled head.

Companies could never get away with this. No-one would invest in them and they would die a quick and painful death. In the future, as accountability becomes more and more important to donors and the Charity Commission, charity accountants will have to sharpen their act.


Friday, June 09, 2006

Cloak and Dagger

Reporting on charities is not half as boring as some may think. My investigations have uncovered a few juicy tidbits in these past few weeks - eat your heart out, News of the World.

But one thing that is driving me mad is dealing with charity press officers. If you think it's hard getting a straight answer out of politicians you should try charities. I admit I'm not always asking nice questions but people deserve honest answers, not weird PR doublespeak.

For instance, I asked Guide Dogs for the Blind if it's true that they are sitting on a big pile of cash because there aren't enough blind people to spend the money on. A bit indelicate, yes, but there was a serious point. They responded - not by answering the question, God forbid - but by yabbering on about "using giving websites proactively" or some such nonsense. Does this make you think they've got something to hide?


Our 1000 charities

Out of the 175,000 charities on offer we are only going to review 1000. Here's why:

Before we could start our work, we had to decide which types of charity to review and we had to find those charities. Sounds straightforward, but it wasn't. Remember, we're doing this for individual donors, and there are no comprehensive, independent lists of charities aimed at individual donors. None. Believe me. We looked.

So we spent two months finding and categorising charities that,
a, solicit money from the public and,
b, spend at least £250,000 each year (smaller than that is too hard for many reasons - we'll elaborate one day).

Our final list won't catch them all but we reckon we have most of them. And our surprising discovery is that there are only about 1000 that fit the bill. The rest don't want your money, are too small (for our reviews), or are dormant.

This mirrors the findings of our nearest counterpart, Charity Navigator in the States, who have decided to cover only 7000 charities - in a market that's seven times bigger.

This makes our work easier and - as long as our categories make sense to the public, fingers crossed - it makes the decision-making by our visitors easier.


Thursday, June 08, 2006

The Lord works in mysterious ways

Adam’s first letter to the religious charities, chapter one verse one: what exactly is it that you do?

Repeatedly I have wandered for hours through the wilderness of a religious charity’s report and accounts, and emerged with no real idea what the charity actually does. Would a simple statement in plain and worldly English be too much to ask for?

Generally, the first step in giving to a charity is finding out what it does. The easier it is to do this, the easier it is to give. Here endeth the lesson.


Thursday, June 01, 2006

Back to the future

As potential donors, it is comforting to know what the charity is planning to do with our money when they get it. What has been staggering, throughout our research, is the number of charities who fail to set out future plans of any sort – a conservative estimate would be that 4 out of 5 charities don’t.

However, the problems do not stop there. Of the ones that do, most only give plans for the next financial year.

Plans for less than 2 years are not enough

The reason is this: charities do not have to present their report to the charity commission for a full 10 months after their year ends, and many do not even manage this.

Therefore, as frequently happens, I find myself reviewing charities’ reports for the year ending 31 December 2004; if they do give their future plans, they will probably only cover 2005; it is now half way through 2006. Consequently, I have no real idea what the charity may be doing now.

I know that planning for the future must be difficult for charities, who are naturally uncertain of their income. But no plans at all, or ones that do not extend for at least 2 years, do not fill me with confidence about an organisation.