The prospect of a grading system for charities’ administrative costs has resurfaced in Joe Saxton’s newly-published strategic plan for building public trust and confidence in the sector, published today.

The idea of an admin cost index was hotly debated by the sector last year after then-Charity Commission chair Dame Suzi Leather mooted it at the regulator’s first-ever new-style public meeting.

At the time, the Charity Commission began examining how such an index might work in practice, but the proposal drew robust objections from some in the sector.  Later the Commission admitted that little progress had been made, though it insisted the plan had not been abandoned.

Now the prospect has been revived as a recommendation in Saxton’s new strategy, unveiled at the Charity Commission’s annual public meeting today.

He said that the sector needs to tackle the known “pinch points” that reduce trust in charities.  Some, such as fraud and maladministration, are already on the Commission’s hitlist, but others, such as perceived high salaries and admin costs, are not being adequately explained or justified by either the regulator or charities themselves.

Saxton, who is driver of ideas at nfpSynergy and chair of CharityComms, said: “There is considerable merit in looking at some kind of grading system to turn complex accounts into easy-to-understand metrics that the public can grasp.

“Up to now, the sector’s response to low levels of public understanding of how modern charities work is to keep its head down and hope for the best. This is how problems build up.”

Saxton published the strategy today because, he said, nobody else appears to have any sort of plan for raising trust and confidence in the sector – least of all the Charity Commission, even though it has a statutory duty to do so.

Other recommendations in the plan included:

• Build a sector-wide trust steering group led by the Commission
• Create a brand strategy for the Charity Commission that will turn it into a household-name brand.  Research has shown that people who are aware of the Commission have high levels of trust in charities – yet only around half the population have heard of it.
• Establish a sector media strategy to increase coverage of charities in the mainstream media. There is currently no routine coverage of charities’ work. Says Saxton: “The challenge is that it isn’t at all clear who is the sector’s communications director. Which sector body or regulator has a director with the resources and mandate to try and change the way that the public sees charities?”
• More non-statutory codes of practice should be devised.  The fundraising community has already grasped this nettle, now similar self-regulatory codes should be drawn up for finance, chief executives and communications.
• Every charity should publicise its regulatory burden.  People nervous about how well their donation is spent can only be reassured by knowing that the charity is highly regulated – yet currently “most charities act as if they have no regulators”.
• Charities must work out how to communicate their impact and importance in really simple sentences of 15 words or less.
• Charities must proactively and transparently explain the endless dilemmas they face about spending and saving money.
• Charities must do great work and tell the world about it.  The strategic plan concludes: “The power of great work by committed people that changes people’s lives and is broadcast to the world is, in the end, the most powerful tool charities have for building trust.”

Read the nfpSynergy strategy here.