When newspapers as diverse as The Sun and the Financial Times both get their facts wrong about charities, it’s time to accept that the sector must offer better figures of its own, says David Ainsworth.

Recently, two very different newspapers have waded into the debate over charity regulation, making badly informed points and calling for dangerous and harmful changes. They illustrated the importance of a better way of representing the charity sector to the world at large.

It started last Saturday, when the Financial Times published a highly inflammatory editorial calling essentially for government intervention in the world of charities, in order to make them more efficient.

The editorial was its second such intervention recently. It seems the high-profile closure of Kids Company has piqued the paper’s interest, in a way that previous issues did not. Perhaps this is because aggressive marketing tactics, high pay and dodgy investment policies are not matters which worry FT readers, whereas the spectre of liquidation is one they fear in their secret hearts.

The Financial Times makes three points.

• There are too many charities and they should be forced to merge
• Charities are too reliant on public funds and must be made to find other income
• The government must regulate more strictly to make sure charities behave properly

These are worrying attitudes, as well as being probably against the law, and certainly completely impractical. They are also based on pretty poor data, supplied without context.

In the same week The Sun also published a highly critical piece, including a series of figures on how charities' income was spent. It effectively said that between 47 per cent and 78 per cent of money raised “went to charities”.

The Sun’s figures were based on a snap reading of accounts, and dismissed the fact that shops spending was obviously higher than fundraising spend for the same income, and that money spent fulfilling a government contract might further a charity’s purpose.

In a way, the FT’s editorial is more worrying. The Sun is probably more harmful in the short term, because it is widely consumed by the giving public, but we expect an inaccurate, partial and unfair attack in The Sun. It’s more worrying to see such a sober, analytical title as the FT leave its reason at the door. And it’s particularly odd because the interventionist nature of the editorial is so different from the FT’s normal view on business. It appears to feel charities are not subject to the laws of competition and supply and demand which govern its readers’ lives.

It’s another piece of evidence, if it was really still needed, that the sector has a serious job to do to explain its place in the modern economic world. Charities cannot ignore the fact that people don’t understand them.

The problem is that there is no fixed and easy structure we can use to rebut accusations of inefficiency. The sector has no metric of its own. As a result, as several commentators said in our news stories, the sector ends up saying “Well really, you should exclude this and include that”. The journalist is going to roll their eyes and use the simplest figure available.

I can hear the objections.

There are huge problems with measurement. All charities are different. They have different income streams and different spending needs. They have different beneficiaries and it’s impossible to compare them.

It’s also important to get away from the idea that some funds are spent “on the cause” and some aren’t. Charities can be more efficient if they spend more on administration. Indeed they mostly are more efficient if they spend more on administration. We shouldn’t apologise for spending money on administration.

The natural reaction, then, is to throw your hands in the air, say “Too hard” and get on with doing good.

Unfortunately, charities exist in the public eye, so that answer’s not good enough. Rightly or wrongly, supporters do seem to want to know how effective charities are. They want to know their money is well spent. And again and again, when people are asked, they believe charities are much more wasteful and inefficient than they actually are.

Beneficiaries seem to have a passing interest in holding their servants to account, too. And charities themselves want to use sensible metrics to tell people how their money is spent. The ones they use now are simply bad. And to be honest charities are complicit in this “to the cause” nonsense. A lot of them have used it to borderline deliberately mislead supporters.

So perhaps it’s worth thinking about this, after all.

A single resource of simple metrics

What we need is a single resource which assesses charities’ activities, takes into account all the complexities of funding and delivery, and produces a handful of simple metrics which everyone can understand, and which work better than pay ratios and “to the cause” figures and the number of charities delivering services to cancer sufferers.

It won’t be perfect, it will involve approximations, but at least it gives people who want to interact with the sector, and don’t have much history, a fighting chance of understanding what’s going on.