The recent Daily Telegraph story and subsequent commentary about high CEO pay in the charity sector, fuelled, bizarrely, by the rather well paid chair of the Charity Commission, has been an unwelcome distraction for charities. Responses to these criticisms have been put forward by various sector commentators and by NPC in this blog and I do not want to preach to the converted here. Instead I want to take a step back and look at why negative stories about the operating practices of charities continue to blight the sector and gain traction with the general public.
Most charity workers agree that there is a disconnect between the public perception of charities and the reality of work on the ground. When asked in the 2011 ‘state of the sector survey’ by Third Sector magazine, 86% of charity workers said they felt the public did not understand how charities work. This is not new. The caricatures of a small charity run by volunteers and reliant on money and resources from individual donors, and of well-meaning charity staff for whom payment is neither required nor sought because of their unwavering commitment to a particular cause, are well established and increasingly problematic. These stereotypes are not a fair reflection of an incredibly diverse sector and contribute to inaccurate perceptions of how charities operate in the 21st century.
This disconnect can lead to public mistrust and disappointment, particularly when held up during moments of intense media scrutiny. Financial performance is an area where the gap between operational realities and public perceptions is particularly stark. Much of the negative media attention that the sector has received has focused on simplistic reports of financial mismanagement; in addition to the current reports of excessive CEO salaries, think administration ratios, fundraising costs, excessive reserve levels, large London offices etc. In reality, understanding the financial position and decision-making of a charity is a complicated process and it is unrealistic to expect the average donor to examine the financial accounts of each charity they donate to. It is therefore vital that charities promote a coordinated, coherent picture of how and why they operate, particularly in relation to their finances.
In the face of recent media criticism about their CEO salaries, several large charities highlighted their low overall running and administration costs—this is not the way to go. While this response may deflect criticism away in the short term, in the long term it simply reinforces the disconnect between public perception and reality (where ‘administration costs’ are essential to the effective running of a charity’s programmes).
There will inevitably be more stories revealing ‘shocking financial irresponsibility in the charity sector’. Some, like the Cup Trust scandal, will be justified. But others will be due to a lack of clarity about the operating practices of charities, and this will needlessly damage the reputation of the sector. Rather than ducking and weaving to get out of the spotlight, national media coverage should be seen as a valuable platform to present a coherent picture of what a modern charity is and how it operates. The gap between public expectations and charity sector realities is stretched to breaking point, it cannot be allowed to grow any larger.