‘Charitable industrial complex’ risks being lazy and unaccountable

06 Jul 2018 News

Danny Sriskandarajah, secretary general of Civicus

Charities have become too interested in what is happening in the boardroom, and have found themselves in a “basic and lazy feedback loop” which does not make them accountable enough, an international fundraising summit heard yesterday.

Danny Sriskandarajah, secretary general of Civicus, the international network for charities, told leaders of fundraising organisations from around the globe that he was concerned about the risk of reduced freedoms in the civil society space, and about declining trust in civil society.

He said part of the problem was that big institutional NGOs had become too focused on growth and on regulatory compliance, and that the most exciting movements in civil society were coming from outside the established “charitable industrial complex”.

Obsessed with the boardroom

“Civil society has got obsessed with what’s happening in the boardroom, and we’ve not paid enough attention to what’s emerging in the society we claim to be serving,” he said. “I open a lot of non-profit annual reports and I look for the word growth. The other day I found it on page two. It’s understanding that charities get focused on growth, but is it the right model?”

He said charities have become focused on “accounts-ability” rather than accountability. Rather than genuinely making sure that charities are answerable to service users, donors and the public, he said, charities were focused on what was needed to produce an annual report.

“If the focus of an organisation is on its annual accounts, it begins to form itself that way,” he said. “We have got ourselves into a basic and lazy feedback loop. We have to check ourselves.

“We should be much more responsive. We should be co-creating much more with supporters. We should listen more to the voices of others.”

He said big charitable institutions had now become a “charitable industrial complex” which has put itself in the middle between donors and service users.

“Almost everyone knows there is a problem with this model,” he said. “We aren’t here to move money through a complex and massive machine.”

Most of today’s big charities, he said, started off as campaigns and pressure groups, driven by a groundswell of popular support. He questioned whether the people who founded those charities intended them to be as they were today.

“Is the best way to help people to fly expats around the world solving problems?” he said. “Why do we employ European nationals to hop from country to country? Isn’t there another way?

“The thing that excites me is the new formations. The registered charity is just one particular sort of civil society organisation. There are social enterprises. There is a growing focus on transformation. People are being really inspired by things like the women’s marches and #MeToo and that’s really exciting. There are new ways of moving power and showing solidarity with marginal groups.”

We can't grow the pot

Sriskandarajah also warned that the charity sector could not grow the total amount of money raised from donors, and that this meant more and more donated cash would be spent not on beneficiaries, but on recruiting new donors.

“It seems unlikely that individual giving as a totality to charity is going to go up,” he said. “That leads to a logical conclusion. If we have a relatively stable pot of resources to compete for, the marginal cost of fundraising is going to go up.

I had a conversation with a fundraiser from a major charity and I asked her how come she was spending so much money. She said ‘I don’t mind stealing market share from my competitors’.

But the more she spends on stealing market share, the more her competitors spend. So as a sector we become far less optimised.”

Costs are going to up, he said, and as a result, the amount of money charities will spend on service users will go down.

“It would be fine if you were in the business of stealing market share, and the market was growing and the number of competitors stayed the same,” he said. “But the market is staying the same size and there is a plethora of new competition.”

New charities were being formed all the time, he said, but existing charities were failing to merge even when there was an obvious case.

“I’ve tried to merge six times and I’m nought for six,” he said.

One answer, he said, was for fundraisers to work together to try to change donor behaviour, rather than competing with one another for the same cash.

“We should be putting more resources into growing the pot,” he said. “All the investment is going into competition, and nothing is going into the structural things which need to change.”


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