The structure surrounding a charity embedded in a corporate host can pay dividends, but to what extent does it also limit the charity's potential? David Philpott muses.

"How much have you been quoted for your annual audit?" asked Jane, the highly competent finance manager who had hitherto overseen all of the cross-charging between the NHS and its in-house charity?

"I'm afraid I can’t tell you that," said I, an aura of secrecy enveloping me like a fine mist.

I was at this particular meeting – held, I kid you not, in a Hazardous Area Response Team, semi-secret location; you know contingency planning for chemical and biological warfare and all that - because this National Health Service corporate charity had recently been ‘disestablished’ and a new independent board of trustees formed.  

For 21 years the charity had experienced lots of goodwill (as was supposed) from its overarching benefactor. You know, postage costs that kind of got lost in the system; ‘free’ accountancy, HR and IT support. Discounted desk space in offices where the charity would never have to face a utility bill or business rate demand. However now, following an amicable divorce, instead of being a grateful recipient of all of this largesse, it had to stand on its own two feet.

Jane’s question was nevertheless a valid one. These sorts of arrangements are more common than perhaps is realised and unless you pay an expert valuer to come in and fix a price for these lost overheads, how can anyone know what benefit – if any - the charity is actually getting?

For me, working with this particular National Health Service Trust had been a joy. Negotiating the separation was more akin to Fred Astaire’s Gay Divorce (as in happy) than the usual acrimonious bitching that goes on when most long-term relationships come to an end.

As we collected up our folders and files and prepared to leave our secret bunker – my imagination is running wild here; it was Training Room 2 on the first floor - I leaned over to Jane, winked and said, “The audit will cost quite a bit less than we have been paying you.”

It is not only NHS Trusts with their subsidiary charities that accommodate these rather unusual relationships whereby the true running costs of the charity – sometimes including staff salaries - get subsumed in the overheads of the parent business.

I well remember a time long ago when I was appointed to run a radio charity that spanned eight stations. In those days, with radio licences coming up for renewal every eight years, a spurt of charitable endeavour commencing in year seven had less to do with altruism – even corporate social responsibility - and oh so much more to do with winning favour with the old Radio Authority. The charity was never charged a penny for any resources it used, but most certainly played a part in securing licence renewals which would generate millions of pounds in advertising revenues. Notwithstanding the motives of my employers, we did raise and give away an awful lot of money to local causes, and that tradition continues with most broadcasters even today.

Whether it is a National Health charity, a radio charity, or any other ‘embedded’ charitable trust, they all share one thing in common. It seems to me that in all these situations, the parent or hosting organisation rarely appreciates what it is they have, what the subsidiary charity is doing and in more cases that I care to recall, possibly wish they did not have it at all.  

Such charities within businesses are sometimes just there because they have always been there and those that sit on the boards – National Health or FTSE 100 – all too often end up frustrating progress through boardroom inertia. Why would you want to discuss a little charity that accounts for 1 per cent of your turnover when you only have a board meeting once a month which has a packed agenda?

In such situations it is the charity staff who are the real heroes. They may have free IT (but internal security protocols do not allow them to use certain software or access crucial websites). They will certainly have a full scale communications and public relations department at their disposal (but every attempt to do something daring is thwarted by overly cautious press officers). Indeed they will certainly have all their management accounts done for them (but all too often they will have little or no say in setting the budget that will drive the charity to the next level). What should be a fundraising dream is in fact a nightmare.  Instead of the resources of a large organisation being at their disposal, the corporate structure – what with all its checks and balances - breeds inertia or becomes a ligature cutting off the flow of creativity.

I hope that there are some readers of this blog who will scream that it is not so with them and their wonderful organisation. Indeed I hope they will tell me as much.