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A priority too far for NPC?

Fundraising | Nick Cater | 8 Jun 2010

Nick Cater examines New Philanthropy Capital's Charities Data Act idea.

New Philanthropy Capital is in a bit of pickle over its lobbying campaign for the new coalition government to force charities to provide more information about costs, spending and impact so they can be subjected to a ratings system.

First, instead of following NPC orders and immediately introducing legislation on charity data, the Lib-Cons have already dropped a clanger with a speech by Jeremy Hunt, Secretary of State for Culture, Olympics, Media and Sport, in which he called for all grant-giving bodies under his remit – such as the Arts Council – to spend no more than 5 per cent on overheads.

Focusing on overheads and choosing such an arbitrary figure is, as NPC boss Martin Brookes pointed out on the think tank's blog, a schoolboy error unlikely to help improve charity performance, though as yet the minister for bits of the Big Society Nick Hurd appears not to have corrected his colleague or, indeed, taken much notice of NPC's five-part to-do list in general.

Second, NPC stubbed its toes on the "strange" and "confusing" results of a YouGov survey asking what the donors thought of an independent rating system to measure charity performance.

A YouGov press release showed that only 40 per cent want a NPC-style charity rating scheme to provide independent assessments of organisations, and just 18 per cent would give more to a charity rated as performing well, while 68 per cent of those polled would switch donations elsewhere if a charity was shown to be performing badly.

Brookes added that 68 per cent of people also think that an independent rating system would not affect their giving decisions, and finds the two matching percentages "tricky" to explain. I would have thought it was obvious: many donors have faith that "their" charities are already performing well, thus making ratings irrelevant for them, while most feel they already have enough information to make their choices.

After all, the poll also found that 45 per cent gave on the basis of a personal connection to the charity, slightly ahead of the 42 per cent influenced by knowing what results the charity achieves, while 29 per cent admitted that their giving is more emotional than rational.

On the wider point of whether ratings are needed or likely to be imposed, I suspect that new laws on charity data are very low on the coalition's list of priorities, while perhaps other steps – such as NPC's own demand for standardised funder reporting and monitoring, a measure that would cut charity costs and offer more comparative data – would be easier to introduce.

Meanwhile, perhaps NPC's strong connections with wealthy donors could find the funding for a cost/benefit analysis of ratings, given the potentially steep price tag for charities of any system that would offer accurate and frequently updated results?

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