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Three-quarters of public say a charity CEO is an admin cost

Joe Saxton, driver of ideas, nfpSynergy
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Three-quarters of public say a charity CEO is an admin cost9

Fundraising | Tania Mason | 27 May 2011

Research published yesterday by nfpSynergy demonstrates the extent to which the public’s perception of charities is divorced from the reality.

It also puts into stark relief the challenge the Charity Commission is setting itself by attempting to better match the kind of information it provides to the public, with the kind of information the public actually wants.

At the Charity Commission’s first new-style public meeting in Wales yesterday, nfpSynergy’s Joe Saxton confirmed the regulator’s suspicions that how charitable donations are spent is the biggest thing that people worry about.

“In the sector we spend a lot of time worrying about what fundraising does when it is not nearly as important to people as where the money goes,” Saxton said.

In 2008 nfpSynergy surveyed 1,011 members of the public on how they would classify different types of charity expenditure - whether they would allocate items to administration, fundraising, the cause or not sure.

Three-quarters think a chief executive is an admin cost

The most worrying finding, said Saxton, was that the salary paid to a charity’s CEO was designated as an admin cost by three-quarters of those surveyed, while just 5 per cent would allocate it to 'the cause'. Likewise, almost half of respondents thought a medical research director was an administrative cost.

“I wonder how many of you, when you do your accounts, classify the salary of your CEO as administration or as the cause,” Saxton queried.

“What’s worrying me is what the public’s view of what is administration and what is in most charities’ accounts, I suspect, is quite a long way apart.

“The public love charities but they really don’t understand much about them.”

‘Aggravation index’ of fundraising methods

In another finding, charity shops were seen as a very effective fundraising mechanism by 58 per cent, when in reality, Saxton said, most are “deeply ineffective” as a way of raising money.

“But the public think they’re fantastic.  Tin-rattling outside a supermarket is also highly ineffective but the public thinks that's effective too.

“What this shows is that the public are not totally tuned in with what’s an effective fundraising mechanism. They think telephone calls at home are deeply ineffective. You might say this is an ‘aggravation index’. Charity shops are jolly nice so they must be effective, whereas we hate those intrusive telephone calls at home so that method must be awfully ineffective.”

People also seem confused about charity remuneration. Plenty of people thought trustees and president were paid roles, while most thought street fundraisers were unpaid. Nearly four in five people thought paying a chief executive more than £60,000 a year was very or somewhat wasteful, with only 1 per cent believing such a salary to be worthwhile.  

The answers to a final question about the qualities members of the public perceive charities to have, showed that accountability is one of the biggest areas of deficit between what the public wants from their charities and what they think they get, Saxton said.

“So here is the Charity Commission putting all this time and energy into making sure that charities are accountable to them, and the public doesn’t see it. Only 12 per cent of the public think charities are accountable and only 9 per cent think they are effective or cost-effective.”

Charity Commission faces tough task ahead

Saxton said the findings show the extent of the battle the Charity Commission faces to make the public better informed about how charities operate – “especially when the average person thinks about charities for 10 or 15 seconds a month”.

“As a sector we should be shouting it from the hilltops - the Charity Commission regulates us so you know you can really trust us to spend your money wisely," he added.

>>See extracts from nfpSynergy's presentation here<<

 

 

 

Peter Munro
2 Jun 2011

I'm really astounded by this article and some of the comments. If you're dividing a charity's expenditure into fund-raising and 'the cause', then some of the administration must relate to fund-raising and some to 'the cause'. However, if you divide expenditure into administration, fund-raising and 'the cause'; then it should be clear that the CEO's salary, and any other costs relating to staff over the heads of fund-raising and 'the cause' should be part of administration.

Surely what the public want to know is how much of their donation is spent on 'the cause', how much on fund-raising, and how much on administration in each of fund-raising and 'the cause'. I would like to know more, how much is spent locally, how much is spent with other charities and local enterprises, and how many people (or families) have you directly helped ?

GA
Trustee
31 May 2011

Surely the key point is that the public believe that money spent on "management" including CEO salary is an admin cost and that is a challenge to all of us to keep "management" costs to as low a level as is sensible for our charity because otherwise the public who provide the money will stop doing so!
Most of us would agree that costs have to be spent on management but management of the charity is NOT actually what we are here for and if management costs get too high there is something wrong - take for example the fuss over the latest accounts for Pact and the salary paid to Catherine Meyer.
The challenge for all of us is to find that balance and persuade our donors that we are getting it right!

Matthew Steeples
14 Sep 2011
Response to [GA]

***** and her employee ****** (whose "charity" I stupidly assisted) definitely were not worthy of nearly 50% of the income of a charity and considerably more in expenses. Charities should be more transparent in describing where their income goes. A simple pie chart showing the percentage of donations allocated to the cause and on expenses should be used on all charity websites. It'd be enlightening to learn where one's pounds go.
(This comment has been censored for legal reasons)

Jeremy Barker
Specialist Adviser
Scunthorpe CAB
2 Jun 2011
Response to [GA]

I think it is entirely reasonable for the public to consider that the salary of a CEO is an administration cost as, I would suggest, are most other management costs.

The real issue in my opinion is whether the management costs are a reasonably small proportion of overall expenditure by the charitable organisation. When management costs become a substantial proportion of the overall expenditure one has to seriously question whether the charity is using its resources wisely and effectively.

Rosemary
27 May 2011

Isn't there a link between the "aggravation index" and not trusting charities, though? If your donors clearly say they hate cold calling, or moral blackmail via begging letters with free pens and you don't respect them enough to take notice they're quite likely to feel they can't trust you not to spend donated money on yourself (which is basically what the complaints about salaries boil down to).

My hunch is that charity shops are liked primarily because they're seen as the charity earning money to do whatever it's particular thing happens to be.

Nigel Edward-Few
Chief Executive
27 May 2011

So I am an admin cost! Do I care? NO!
All I know is that things don't run themselves. Perhaps it's time that the 'public' whoever they might be that care about such things got real.

Edward
31 May 2011
Response to [Nigel Edward-Few]

A very humble attitude from a CEO of a Christian Charity (Nigel Edward-Few), I hope that is not representative of your charity.

Steve Lawless
CEO
Brighton and Hove Impetus
27 May 2011

But the general public do not understand the function of management, whether it is for charities, public bodies or commercial companies. The government frequently exploit this when making cuts. They want services well managed but they don't want to pay for the management!

Rosie Barrett
PR & Communications
Kudos Software Ltd
27 May 2011

It is not only 'the public' who are confused by the necessity for proper admin and accountability. We supply charity shops with software which, used properly, can save them time, money, and in the case of reclamation of Gift Aid, actually make them money. We, as a company, support a couple of charities our staff have immediate dealings with, and we find it very frustrating when the system isn't used properly, because training opportunities haven't been taken up, when managers are frightened of their volunteers and so do not ask of them what any manager on the High Stret should have a right to ask. The one thing, in my personal experience, which volunteers dislike most is the feeling that their time, which they give freely, is being wasted. And this is what is happening all the time. Wasted time is wasted money. Wasted money in a donated context is a crime. This is my personal opinion. RMB

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