Kirsty Weakley: Who ate all the pies? Will charities ever win the battle on ‘admin costs’?

25 Feb 2019 Voices

Yesterday’s article about core costs may feel unfair, but charities shouldn’t sweep aside the message about pie charts, writes Kirsty Weakley.  

The Money section of the Mail on Sunday yesterday ran a piece criticising charities for “fat-cat pay, spin doctors and other running costs”. 

It’s a familiar headline for long-term followers of charity news. A newspaper looks up a few numbers in some (publicly available) charity accounts and finds itself horrified, even better if it can find high-profile commentator or MP to also be horrified. 

Charities then explain that they have not broken any rules and there is a bit of sulking about the fact that that the paper hasn’t grasped how complex the sector is. 

In some ways charities can be relieved that the story was confined to the financial pages, in contrast to a few years ago when fury over admin costs and senior pay could easily make the front page. But that could be more because of the currently crowded news agenda, than because of any significant shift in the media’s understanding or interest in charities. 

Not for the first time, it was the pie charts displayed on the Charity Commission register that were part of the reason for consternation. 

What is the message for charities?

High executive pay is always going to be a recurring issue for the sector. It’s hard to know how to address this because high-pay at an anti-poverty charity is always going to be an uncomfortable juxtaposition. 

But the other main criticism in the piece is about how charities present the information. The Mail and its readers understood the phrase “charitable activities” to mean directly helping the poor or the sick, or injured animals, and are then surprised when it includes things like salaries.  

I understand the confusion. Instinctively “charitable activities” sounds like it means “the frontline”. But I can also see that everything a charity does, from the person on the ground delivering aid to the person who fixes the photocopier feeds, has an important role in delivering the charity’s mission. 

Charities might be sticking to the accounting rules, but if journalists or the public think that the rules have been designed to hide the truth, they won’t have much sympathy. 

By that point it’s hard to make arguments about information being taken out of context or presented unfairly. 

Transparency, transparency, transparency

Since the last time that criticism of senior pay made the headlines, few leading charities have actually committed to full transparency of their senior executive pay. Publishing information on page 57 of an annual report is not true transparency. 

Reading and understanding charity accounts is not something that most members for the public will be doing. It’s not enough to publish information, it must be accessible. 

If journalists need to find information by looking through long reports, newspapers will always be able to present information they discover as something they have dug up. 

Be proud of core costs

Until the sector itself can show it is proud of its core costs, how can it expect anyone else to understand them?

Often at charity conferences and seminars, speakers begin their talk with a bit of pre-amble about what their charity does. Sometimes they include a pie chart highlighting how much money goes ‘to the frontline’. You know who you are. 

Many more charities include such percentages on their websites or in fundraising materials.

Inferred in statements like “we’re able to spend 81p in every £1 donated on beating *insert disease*” is that it is good for the “frontline” part of the pie to be as large as possible.

The truth is that every cause is different, every charity is different and every organisation is at a different stage in its development. There is no magic number for how much core or admin costs should be – and nor should there be.

Every charity should be encouraged to work out what is right for them and feel supported to get on with it. If the sector won't take a lead on this then I'm not sure who can. 

Different pies

It’s possible to tie yourself in knots arguing about what is and is not a “core cost” and what its value is. My feeling is that perhaps a more holistic approach is needed.  

Pie charts are useful tools to describe a breakdown of activity, but the ones the sector is using are perpetuating some its communications problems. 

Maybe we need a different form of presentation? Is there a way that information about what the charity does and how could be displayed visually and accessibly, maybe not as a pie chart but in a clear and simple way that helps to minimise confusion?

Earlier this year Kate Lee, chief executive of CLIC Sargent, wrote about how her charity is trying to develop a "golden formula" as an alternative to "penny in the pound" ratios. Others should follow her lead. 

The next issue of Fundraising Magazine looks at crisis communications. Find out more about subscribing. 

 

 

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