person looking at paperwork

How I’d analyse a charity in two hours

By Iona Joy 23 March 2010

‘There’s a lot to do if a funder wants to analyse a charity. What if the funder only has two hours to make a decision? Or a day at most?’

This comment from James Whiting at Friends of the Earth set me thinking. My immediate reaction was that if a funder is thinking of investing a substantial sum in a charity, say £30k or more, then taking the time to do the analysis suggested by our guide to analysing a charity is worth the money. A full analysis gets you answers you can’t get in two hours. Two hours is too short a time to visit a charity to get a feel for its activities and atmosphere, or to speak to more than one person in the organisation. You wouldn’t be able to do any digging about the sector, or hear what third parties thought of the charity.

But many donors want to give smaller amounts and such donations might not warrant a week-long plus process. So how would I spend two hours?

We’d welcome any opinions on this challenge, and what you think of the analysis we do. Below is what I’d do with the first hour. My thoughts on the second hour—a phone call to the charity—will follow next week.

The first hour: Desk research

25 minutes: Rummage on the charity’s website

NB smaller charities may not have many resources to spend on a flashy website, so I’d have to match my expectations to the size of the charity.

  • Can I understand what the charity is doing and why?
  • Is it clear what it achieves? Is there any evaluation material to look at? How else does it tell me what its achieving? Case studies are vital, but I’d also like something on what it achieves overall.
  • Does the charity have the information I need on its website, eg annual reviews and accounts; strategic plan; trustees and management team?
  • Is there any honesty about the challenges the charity faces?
  • Do I think the charity is communicating well, preferably without jargon, to its audience?

10 minutes: Snippets from elsewhere on the web

I’d see what Intelligent Giving has to say about the charity’s transparency rating. I’d also check recent press including Third Sector (the charity trade magazine), and try to find something about the chief executive and his or her background.

25 minutes: Look round the charity’s accounts for the last two years

You can find charities’ accounts on the Charity Commission website—unless they are Scottish. Charities should also post their accounts on their own websites.

If the Chairman/Chief Exec report in the accounts is all about outputs and fundraising gigs, with no mention of real results, challenges or risks, a warning light should come on. Then look at where the money comes from, where it goes, what risks are lurking. The financial section of our guide to analysing a charity tells you more about how to do this analysis.

Read part 2 of this blog here.