Over the weekend I listened to a very interesting programme on Radio 4 all about charities delivering public services. The issues it raised were familiar to anyone who has worked in the charity sector in the past few years. Can charities deliver public services and still remain true to their mission? How can charities fulfil government objectives and still be responsive to their grass-roots? Are charities professional enough to run public services? Are charities efficient?

Ah yes, efficiency. And how can we know whether or not charities are efficient? By looking at their overheads of course! Cue a researcher who had been looking through charities accounts and told of overheads up to 13% in charities delivering public services. Scandalous.

But there’s a problem here. As NPC has ranted time and again, looking at overheads does not tell you how efficient a charity is (see here and here). The important question is how much does a charity achieve? What is its impact? A volunteer helpline, for example, will have very low costs for delivering the service but may spend a lot looking after and training volunteers. If this counts as overheads then the charity will look inefficient even if it is delivering great results for the people it works with.

There is a classic story told to students of statistics about drunk man who is looking for his car keys under the street lights. When a passer by asks him if he dropped his keys by the street lights, the drunk answers ‘no, but the light is better here’. It is always tempting to look where we can see rather than where we know the answer is.

Perhaps the reason we care so much about overheads is because those are the only numbers we have to compare charities.

In the world of charities there are accepted truths which to many appear self-evident: ‘charities are more expensive because they deliver a better service’ and ‘charities have a better understanding of those they are trying to help’ to name the two I hear most often. I am sure that there are charities that deliver a better, more efficient service than public services but I am also sure that there are some that aren’t. Each organisation needs to be assessed on its own merits, based on what it is achieving.

Being compared with other charities is scary, there is a lot at stake. But if we don’t collect the right evidence then charities will be compared anyway—on the data that is there rather than the data that is important.

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