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Good, bad and ugly

Finance | John Tate | 28 May 2009

Whether we like it or not, some charities waste their IT investment. John Tate looks at the reasons. 

Characteristics of ‘the good’ are those with independent boards with relevant experience that are willing to speak their mind and challenge the executives. Chief executives who take a real interest in all areas of expenditure and make sure they understand how and why money is spent.
The bad is that I have come across too many examples of where this approach was not taken. I have seen large budgets set and spent where there was little or no real assessment of the investment decision. Despite obvious warning signs boards of trustees have nodded through approval for projects that should never have been agreed.

Characteristics of ‘the bad’ are weak boards – where trustees lack experience of running an organisation – or sadly where there are in their role to enjoy the status of their position more than to help the charity they engage with. At the staffing level further signs of problems are where the chief executive doesn’t understand or take time to look at the ‘back office’ function and make sure it is well run like the rest of the organisation.

Capacitybuilding initiative 'a fiasco' 

The ugly is that the bodies one turns to for advice, guidance and help in this area have at times really let the show down. Consultants who are called into projects to advise on an investment all too often think first about their P&L account for the work – rather than helping the charity achieve its objectives. The government has invested in helping charities with making better use of IT and there are some examples of where this has helped the sector. However, the major initiative of Capacitybuilders which kicked off in 2005/6 was in my opinion a fiasco. A small number of the umbrella bodies saw this as a chance to get their hands on significant sums of money to support their organisation and power base. The egos of certain individuals drove money into projects which delivered little benefit to the sector.

So what can the FD of a charity do if you see evidence of ‘the bad’? If you report the issue to the chief executive you may solve the problem and ruffle some feathers of your colleagues along the way. However if your chief executive is part of ‘the bad’ you are likely to be reprimanded for your interference. You can turn to your board but trustees tend to support their chief executive. You need to be prepared for a long battle to win your case and there is a real risk you will lose your job along the way.

Egos and power drive the agenda 

Whistleblowing is an option but this is also high-risk. People who speak out tend to be regarded as cranks and boards/senior executives have a habit of closing ranks against these individuals. Also the whistleblowing process takes time and a massive amount of effort and stress. For example in the case of Capacitybuilders I was supported by a significant group of chief executives of umbrella bodies who saw, like I did, that egos and power was driving the agenda of who was going to get the money. Despite significant profile in the press, letters to ministers, etc, I and others were unable to get the government to see common sense. Four years later hundreds of millions of pounds have been spent and in the opinion of many largely wasted.

So how can we change ‘the bad’ and ‘the ugly’ – and make sure ‘the good’ are recognised for their efforts? We can learn from ‘the good’ and help donors/funders focus their money on these organisations. No doubt there will be some readers who will criticise me for expressing views on the bad side of charities. Negative comments about voluntary organisations are generally not well received in the higher echelons of the sector.

However, I believe that greater transparency is key to change – and there is too much being done badly in the sector to ignore this. So with the transparency issue being a hot topic today why not express your views?

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