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Charity league tables are coming whether you like them or not2

Finance | Tania Mason | 19 Jun 2011

Acceptance is growing of the idea of comparisons between organisations in the sector, says Tania Mason.

The welfare-to-work charity Tomorrow’s People deserves a standing ovation for the trailblazing work it has done to quantify the value of its work to society, published in a 109-page report launched last week at the hopefully auspicious surroundings of the Bank of England.

Of course, it had the benefit of many hours of free help from some highly-qualified consultants at FTI Consulting, brokered onto the project by Pro Bono Economics, but the analysis also required a great deal of extra work by the charity itself.  Its chief executive, the affable and effervescent Baroness Stedman-Scott, described the data-collection required for the report as a “stretching exercise” for the organisation.

One of the things it did was to telephone 2,000 former clients to find out what had happened to them after they were found work by Tomorrow’s People – whether they were still in that job, had gone onto another job, or had fallen back into the benefits system.  This helped to establish the sustainability of the assistance provided by the charity, and meant the analysts were better able to estimate the income tax receipts generated, the savings in welfare benefits, and the ensuing lesser demands on the health and criminal justice systems.

Tomorrow’s People now hopes to use this report to persuade funders to stump up more cash so it can scale up its services and help more people find work. It will also use it when tendering for statutory contracts; as the Baroness said, tenders should be awarded based on value, not just on price. And with this report, Tomorrow’s People has a great story to tell and proper numbers to back it up.

But the real value of this kind of impact assessment only comes when the numbers can be compared with equivalent numbers from other organisations working in the same space. Public service commissioners can only really make the best judgements on value provided by bidders if those bidders have all undergone similar analyses, using comparable data sets and methodologies. Ideally, funders need to be able to weigh apples against apples.

So confident is she in her organisation’s work, Baroness Stedman-Scott is 100 per cent behind this concept. Not only does she want other welfare-to-work charities to follow the lead of Tomorrow’s People and report their own outcomes, she wants to see a “social FTSE” in the financial pages of newspapers, ranking the biggest civil society organisations according to the value they provide to society.

In public, few would dispute the benefit of this level of transparency. But the problem is that for every charity that is shown to be highly effective, there will be one that is less effective. That’s the nature of benchmarking – some are better than others. And therefore persuading those whose results are less good, to volunteer that information to funders, is like asking turkeys to vote for Christmas.

The Baroness knows this only too well.  When she was chair of ERSA, the trade body for welfare-to-work organisations, she tried to convince all its members to publish their outcomes data, but none except Tomorrow’s People would do so. 

Of course, there are pros and cons to benchmarking and still plenty of opposition within the sector by those who claim that results can be too easily manipulated, often to the detriment of the hardest-to-help beneficiaries. But after many years of utter rejection by charities of anything resembling league tables, a degree of acceptance finally seems to be taking hold. Even the Charity Commission is getting in on the act, looking at devising a consistent way for charities to allocate their costs within their accounts so it is easier for members of the public to discern how much of each donated pound is spent on ‘the cause’.

At Friday’s report launch, Filippo Cardini from the Towerbrook private equity firm declared that comparisons and benchmarking are perfectly normal in all other parts of our lives, and so civil society organisations must get used to the same scrutiny.

On one hand it seems a bit unfair that charities, set up for the purpose of helping others, should have to justify their expenditure to a public that doesn’t seem to give two hoots how private companies, set up to benefit a limited group of shareholders, distribute their incomes.

But at the end of the day the beneficiary is king, and if Charity A can deliver more effective services than Charity B, then their donors have a right to know. In the absence of greater merger and acquisition activity in the sector, it’s the best way of weeding out the weak and guaranteeing the survival of the fittest – and ensuring the most effective service models take root.

Directory: Charity Commission | Tomorrow's People