The charity sector is up in arms after press coverage of A Hornet’s Nest,  published a few days ago by the True and Fair Foundation, which claimed that a number of big charities were not spending enough on their charitable activities. Their rather ill-conceived working has been excellently dismantled by a range of people, not least by Civil Society’s David Ainsworth, but suffice to say any methodology that would hold up Kids Company as a shining example for the sector is fundamentally flawed. The fact that, by their own reckoning, the True and Fair Foundation only spent 47% on their charitable activities in 2013 would be amusing if the allegations weren’t so potentially damaging to the sector.

Once you get past the appearance of a hatchet job on charities though, there definitely is a debate to be had about how charities best maximise and demonstrate their impact. Whether you are an individual looking to make a donation, a funder looking to invest, or someone who might need some help with a particular issue, you want to know that the charity you decide to put your faith in is actually going to make a difference. Given that the public are the lifeblood of charities—donating time and money to causes, issues and organisations that they care about—the sector does need to be more transparent.

Admin costs can be misleading…

Now the True and Fair Foundation decided that a very crude measure of money spent on charitable activity was the best way to decide this. At NPC, we would disagree. In The little blue book, our guide to analysing charities, we point out that: ‘administrative cost is not a predictor of what a charity achieves. In fact, spending more on back office staff can lead to improved results…As well as being potentially misleading, administrative spend is not straightforward to interpret’. As my colleague Cecilie Hestbaek previously pointed out, when people choose a school for their kids they look at the league tables to understand how effective the school is, not the teachers’ salaries. So what matters most is the impact the charity actually has—the difference it makes on the ground to the lives of the people they are trying to help.

…But scrutiny is a good thing

If charities and funders can be transparent and accountable about the evidence of their impact, then not only is the public able to feel confident about the time and money it donates, but also reports like A Hornets Nest are more easily batted away. Alternatively, if the sector retreats to its comfort zone, falls back on blaming ‘the media’, and doesn’t seek to improve the evidence of the difference charities and funders make, then it’s the equivalent of kicking a hornet’s nest. Not the best of ideas, and you’re likely to get badly stung in the process.

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