The Charity Sleuths

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

Monday, July 31, 2006

Unrestricted fun

We have recently found that a number of the smaller religious charities have really quite large unrestricted funds (the money that the charity has and is free to spend), relative to their expenditure for the year. This has been quite puzzling: it seemed at first that they were simply hording their money or saving for a rainy day. Raining frogs, perhaps.

However, on closer inspection it appears that some of them have included in their ‘unrestricted funds’ the value of their buildings. The theory being, presumably, that if it came to it they could sell their buildings and use the cash to continue their good works.

There is a certain logic to this. However, other charities do not include their buildings’ value in this, presumably feeling that these are integral to their work and/or that it is not easy to get their hands on the money tied up in them.

I do not know which method of accounting is more useful for donors. However, it is just this sort of variation that makes comparing charities by their figures alone difficult, and this highlights the need for charities to be absolutely clear about where they get their figures, and what they refer to.



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