Dame Suzi: Commission and sector must try to devise admin cost index2

Finance | Tania Mason | 27 May 2011

Finding a fair way to report how much of each pound donated to charity is spent on the cause is the “holy grail of charity information” and a task the Charity Commission and the sector ought to attempt, Commission chair Dame Suzi Leather said yesterday.

Expanding on chief executive Sam Younger’s revelation earlier in the day at the Commission’s public meeting that the Commission has begun a piece of work to look at what it can do to help the public better understand how charities operate, Dame Suzi said it was clear that this is what the donating public really wants to know about.

“What people want to know is how much of the pound they donated goes to the cause,” she said. “It would be desirable if somehow between the Commission and the sector we could build an agreed good-enough indicator or index that the public can use and trust which tells them what they tell us, and what Joe Saxton’s research tells us, they are really interested in.”

Dame Suzi added that she was “under absolutely no illusions about the complexity of that task”. But the fact is that some charities are already creating their own models for allocating costs in their public documents and unless this is done in a standard way across the sector, there is potential for confusion and a danger the public may be misled, she said.

'A good-enough index'

Dame Suzi added: “In trying to generate a conversation between us about this I think we would have to know at the start this will not a be a perfect index, it will be a good-enough index.

“If it is to command authority it needs to be co-designed by the Commission and the sector and I can certainly imagine some of the objections and some of the problems, not least the fact that it will have to be Sorp-compliant. And of course we don’t just regulate one sector, we regulate lots of sectors - there are huge differences between different organisations on the register.

“Finding a fair indicator of percentage that goes on real cause across all that diversity is pretty complex but I think it ought to be front of mind for both the Commission and all charities in the sector because it is clearly front of mind for the public.

"We may find it's not doable, but we ought to at least try."

Directory: Charity Commission
Who's Who: Joe Saxton | Suzi Leather

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James Gare
Partner
Gotham Erskine LLP
27 May 2011

The sector is diverse and even organisations in a similar field can operate significantly differently. For instance a Charity that simply raises income and makes grants will have a much simpler operation (and presumably less overheads) than one that is trying to also deliver outputs at a grass roots level. Is it fair to then compare them on their overhead cost?

I also worry that this will encourage Charity's to divest in infrastructure, causing operational problems. For instance Charity's may be encouraged to spend less on roles such as finance, increasing the risk of fraud.

[Reply]

Patrick Manion
Consultant
US Based
27 May 2011

You can follow the guidelines of the IRS (U.S.) also the Better Business Buerau and Guidestar have rating systems. Charities should report on a 990 form, (U.S.) and it shows expenses quite clearly. Let the donor decide then what they want to do

[Reply]

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