20 Jul 2016
Cazenove's Kate Rogers predicts the economic outlook of a post-referendum Britain.
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The True and Fair Foundation report on the front page of The Telegraph was superficial nonsense, says David Ainsworth, but charities are going to keep getting hammered unless they change their ways.
Charities are back in the newspapers. This time it’s in the Telegraph, one of the two newspapers which have most consistently criticised and attacked the sector.
On Saturday, the Telegraph chose to give space on its front page to The Hornet’s Nest, a report by the True and Fair Foundation, run by Gina Miller, philanthropist and ardent self-publicist, which suggests in essence that many large charities spend less than half their income “on the cause”.
The report reaches this conclusion through some fairly, well, heroic reasoning. It basically takes all the money not spent on front line services and writes it off as worthless, including money spent on running charity shops and money raised in one year which is due to be spent in another. This leads, of course, to arbitrarily low efficiency ratios for many of the country’s largest charities.
The logical conclusion, of course, is that all shops should be shut and that large one-off gifts to charity should be spent immediately.
It’s thinking which leads you to absurd places. The Daily Telegraph’s own charity of the year, for which its Christmas appeal is raising money, is Horatio’s Garden, a small charity which appears to do excellent work. For various reasons, mostly to do with the fact that you need to raise funds first before you build a garden, it raised £293,000 in 2014, but spent only £42,000 on charitable activities – a ratio of 14 per cent.
On the other hand Kids Company, according to the Telegraph and the report, was an excellent charity. Its ratio was over 90 per cent.
It’s nonsense, in short. Attractive and beguiling nonsense, unfortunately. But nonsense, nonetheless.
What’s worrying is that the authors of the report were told at length that it was flawed, before it was published, not just by NCVO but by the Cabinet Office and the Charity Commission. Yet they went ahead anyway. The Telegraph was also told, at length, by the same people, and also went ahead. Karl Wilding of NCVO has explained since, in excruciating detail, exactly why it’s rubbish.
The question then, for me, is why the Telegraph carried it. Why are such dangerous and damaging half-truths are gaining currency? Why are intelligent reporters peddling this crap? And what can the sector do about it?
There’s little doubt that national newspapers – particularly the right-wing press – are determined to have a go at the charity sector. Rather worryingly, this report is not even the first to draw the same conclusions this year, based on the same flawed reasoning. The Sun produced an article earlier this year saying exactly the same thing.
In all, I can count eight separate and dangerous accusations which have been levelled at the sector by the newspapers this year, some of which have more weight behind them than others:
Among the country’s largest newspapers The Daily Mail, The Telegraph, The Times, The Sun, the Financial Times, the Daily Express and the Evening Standard have all given space to direct attacks on the efficiency of the charity sector.
The narrative – of wastefulness, inefficiency and a sector out of touch with its supporters – is now well-established in journalists’ heads. Having had a few conversations with national newspaper journalists about the subject, it’s clear they feel that this is a sector ripe for attack. There is already a presumption of guilt before the story is written.
It’s tempting to say this is just an agenda. They’re deliberately ignoring the facts because it makes a good front page. But it’s a bit more complicated than that.
Journalists believe, at heart, that everyone is lying to them. They like clear and simple narratives in which there is someone doing something which is obviously wrong. Some are willing to wilfully ignore the whole truth for the sake of a convenient narrative. Most are not, but they’re congenitally willing to believe the worst of people. Now, in charities, they feel they’ve found a soft underbelly. If you couple that with some simple and believable statistics, which appear at first glance to be backed up by the Charity Commission website, it’s no surprising they’re happy to run something.
Then there is the genuine belief of many on the political right – not just reporters but MPs, too – that charities are genuinely badly run. These individuals often support charities, but believe in service delivery and voluntarism, and are heavily opposed to campaigning.
The trouble is that some of the criticism is well-founded. I think almost all of us accept that many charities went too far with their fundraising. It makes the newspapers believe that there is some merit in the other accusations. Particularly the most damaging ones about pay and efficiency.
The charity sector has up until now been entirely reactive to the media. It has rebutted claims, but made little running of its own. There has been, in some cases, a positive strategy of refusing to engage, because it could give the story oxygen.
This theory doesn’t seem to have worked. The narrative that charities are poorly run is firmly established in the journalistic consciousness. It will take some serious spadework to dig it out.
Sometimes when journalists get a story like this under their skin, they’re really onto something – MPs’ expenses, for example. Other times, it’s rubbish – the link between MMR jabs and autism springs to mind. The trouble is, they want it to be true, because if your job is to produce a good story, and you think you’ve got one, it takes a lot of pushing for you to be dissuaded.
So there is a definite correlation between how much the mainstream media knows about a particular issue, and how fairly it’s reported. Most journalists don’t know anything about charities, and it shows. Nor, when it comes to that, do most of the public. Their trust in the sector has largely been based on ignorance, and on an outdated understanding of what the sector does.
One solution is education. The sector needs to publicise the work is does much better. Programmes tracking the work of charities would make good television, and would raise the sector’s positive profile. This is something to really fight for.
Another is to accept criticism and change. The sector has to admit it’s in the wrong on fundraising, and it probably has to take some criticism on its investment policies. But that’s not enough. The sector also needs to measure and monitor itself much better.
But as I’ve written before, there’s also the need for the sector to measure its own effectiveness. In a vacuum, without good metrics, we will continue to have the newspapers use crude proxies to assess charities, and find them wanting.
This was obviously an awful report, and there was a deliberate agenda to attack charities, but it was able to exist because charities have never produced metrics of their own.
The same argument applies to Kids Company. The lack of any effective, impartial measures of charity effectiveness allowed them to parrot appalling data measurement and their mandatory audit as clear evidence that they were doing brilliant work. No one questioned them for 19 years.
Kids Company showed the limitations of standard accounts and audits. These measure financial probity, but they really are not effective tools to measure whether a charity is delivering on its mission. Yet to an outsider they are the only measures that exist.
It is time for the sector to produce its own standards. Not just because of outside scrutiny, but because charities have genuinely been too slow and reluctant to measure their own effectiveness, and now others are starting to do it for them.
You can see why charities don’t want to. Charity effectiveness is difficult to measure, and any proxies are going to be questionable. It costs money to track this stuff, which could arguably be better spent. And the moment you start using analytics to track doing good, you risk creating perverse incentives. In the US, where measurement of charities is much more advanced, there are still wildly inaccurate claims. Over there, some people are trying to fight it with the idea of the “impact audit”, though I don’t know if what they’re doing is quite right.
The fact is, however, that charities must produce their own evidence if they don’t want others to do it. And not just individually, either. There must be a collective standard. Then, next time report like A Hornet’s Nest appears, we can point at our own evidence and say “No, look, we measured already. That’s rubbish.”
20 Jul 2016
Cazenove's Kate Rogers predicts the economic outlook of a post-referendum Britain.
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