Cracking the impact measurement puzzle could sway public opinion on how charities should spend their money, says Vibeka Mair.  

At the weekend Comic Relief generated strong support  from the UK public. But there was a small minority who took to Twitter to criticise the charity’s spend on its CEO pay. “Better get donating to Comic Relief so its £130,898-a-year chief executive doesn’t starve,” one Tweeter quipped.

Another said -

 

 

Unfortunately this type of view on a charity’s spend is not uncommon. Dan Pallotta, a long-time proponent of adopting business-like models to tackle social need, succinctly summed it up in a recent Ted speech: “People have a visceral reaction to someone making lots of money to help people, but not to someone making a lot of money not helping people."
 
In the Ted speech, entitled ‘What we think about charity is undermining it’, Pallotta complained that while for-profit companies are free to innovate, take risks, make mistakes and can reward themselves and their top staff financially for success, non-profits are crucified for attempting anything similar.
 
I’m not sure his view is entirely correct. Yes, charities are often criticised if judged to be too ‘corporate-like’ - just recently Margaret Hodge MP said charities should be required to spend a minimum amount on charitable activities and philanthropist Gina Miller railed against charities that pay their staff six-figure salaries, have marketing and media departments or use consultants – and it’s true that for-profits are not subjected to such constraints. But it must also be remembered that ordinary people do routinely get exasperated about the vast amounts people such as corporate CEOs, television personalities and bankers get paid.

And companies often come under fire for making vast profits and not passing them on to their frontline staff or cutting prices to their customers; or are slammed if they’re considered to not be paying enough corporation tax. And while for-profits may be more free to try something new, they too face criticism if they screw up – witness Apple’s dire maps application on IOS 6.

Any organisation’s activities and structure - whether not-for-profit or for-profit – can be subject to public scrutiny. But if all its workforce is considered to be treated well and the organisation delivers good products or services, it will usually be held in high public esteem even if it makes a good profit and pays staff high wages. John Lewis comes to mind.

This is where impact measurement is key. Dan Corry, chief executive of NPC, explains it perfectly this week in the Independent: “A suspicion of what charities actually deliver is holding back donations,” he said.

If charities can prove they’ve made a deep and tangible change to a social problem, people may be more willing to accept high salaries for the chief executive or senior team or a high-profile advertising campaign to promote their cause.

Take the story two years ago of parents defending their primary school head teacher, criticised for taking a £200,000 salary. There was uproar in the press, but parents came forward and said he deserved the salary as he had transformed the fortunes of the inner-city school.

A recent report on impact measurement has highlighted the importance of telling the story. If charities can show they are really pushing the needle on big social problems and ending homelessness or finding cures for cancer, we may find the regular uproar around ‘administration’ spend of charities could fade.

But for now comments like below will continue.

Watch Pallotta’s Ted speech below.