The Charity Commission has opened an inquiry into Child Survival Fund, which spent 56 per cent of its income on fundraising last year and owes almost £500,000 to a US-based direct mail company.
In recent years the charity has spent a significant proportion of its income on raising funds and was one of ten charities identified by a Sunday Times report into high fundraising costs last year.
Child Survival Fund was registered in 2006 to combat child poverty and operates in Haiti.
In one year it spent 81 per cent of its voluntary income on fundraising. The charity’s most recent accounts, for the year end March 2016, show that the charity had an income of £489,000 but spent £273,000 on raising funds.
According to its latest accounts it owes £495,000 to Market Development Group which has “agreed extended credit terms with Child Survival Fund”.
Issued an action plan
The Commission said it had been engaging with the charity over some time and had issued it with an action plan in January 2016. It opened a statutory inquiry on 9 February 2017.
Its inquiry will consider:
- Whether the charity complied with the action plan
- If trustees have acted in the charity’s best interests and managed its financial affairs properly
- Whether it “acted with reasonable care and skill in respect of its fundraising agreement”
- If it managed reputational risk properly.
In the charity’s latest set of accounts said the charity said its direct mail plan was designed by the president and submitted to the board for approval.
It said: “Prior to the beginning of each fiscal year, the president submits a mail plan and budget to the board of trustees which details cost and revenue for all fund raising activities for the entire year. The mail plan includes acquisition mailings, house mailings, thank you letters, reactivation letters, telemarketing activities and newsletters. After detailed review, the trustees amend, enhance, and/ or reduce the mail plan and budget and by majority vote approve the mail plan and budget for the subsequent year.”
Sunday Times investigation
In May the Sunday Times published an investigation into high fundraising costs at some charities. It had exclusive access to the Commission research into ten charities with direct mail as their principle source of income.
The Commission had identified 350 charities that use direct mail as a main source of funding and the selected ten for further scrutiny at random.
At the time, David Holdsworth chief operating officer at the Commission, told BBC Radio 4’s Today programme that the regulator was taking action.
He said: “We’ve required a series of actions by the charities, such as reducing the cost of fundraising, ensuring they are more transparent with the public and donors, ensuring that the information available to choose to donate or not is very clear, and shows what percentage of the donation will end up with the end beneficiary of the charity.”