One in five of Britain's biggest charities spend less than 50 per cent on good works, new report claims

New research, ‘A Hornet’s Nest’, questioning charitable spending levels - finds 17 large charities with £50m+ per annum spend on average 43% on charitable activities.
292 charities, with combined income of £2.4bn, spent 10% or less on charitable activities

The True and Fair Foundation, started by philanthropist and vocal transparency campaigner, Gina Miller, analysed 5,543 charities with a total combined annual income of £40.7bn, with the simple aim of discovering how much of their income was spent on the end charitable activities.  

The team were staggered to find 292 charities, with a combined income of £2.4bn, spent 10% or less on their charitable activities; having analysed data from the Charity Commissions’ websites.  

They also identified 17 of the UK’s largest charities that on average spent 65p or less of every £ of income on their charitable activities.  Three of the charities, the Lloyd’s Register Foundation, The Racing Foundation and The Motability Tenth Anniversary Trust - with a combined annual income of £1.2bn spent just £20m between them on charitable activities.  

To read the research document in full please click here

The research discovered data errors on both the existing and new ‘Beta’ Charities Commission’s websites; even though the new Beta search tool website aims to prominently and simply display income and expenditure.  The Regulator’s online data is meant to be ‘the authoritative source of information on charities in England and Wales’.  Registered charities’ details are viewed online over six million times a year, but it now transpires much of this data is either incorrect or out of date; or sometimes both.

The True and Fair Foundation’s findings pose serious questions for the charity sector:

1. Should there be an urgent review of the rules that allow organisations to be granted charitable status? Especially as this status tends to result in tax benefits such as reduced business rates, VAT, stamp duty, capital gains, tax on dividends, and being granted gift aid.  All of which deplete the public purse.  
2. Should there be a periodic three year review of organisations’ charitable status?
3. Is it now time for a voluntary or mandatory minimum annual dispersal rate set for charities? It is the view of the True and Fair Foundation that a minimum annual dispersal rate of 65% should be debated.
4. Is there a need for a simpler accounting methodology to enable greater understanding of a charities’ finances? 
5. Is it time to impose a ‘Give & Good label’ across the charity sector which would clearly allow donors to see how much of annual income is being spent on the end charitable activities?
6. Does the sector require more financial oversight and accountability?
7. Why are donors - private, corporate and government - not asking more questions about the charitable work being delivered by charities? 
8. Should there be limits on senior executive remuneration, including pension provision?

Gina Miller, founder of the True and Fair Foundation said, ‘As the State continues to shrink, the charity sector will become even more pivotal to society. But this does not excuse many of the excesses and inefficiencies that appear so prevalent within this sector.’  

‘It is an utter disgrace that so much of the money people generously give is going to feed large charity machines, which are often characterised by obscene overheads and salaries, aggressive fundraising, and bloated marketing and publicity departments; resulting in questionable levels of charitable spending.’

‘The other travesty is that the army of extraordinary small and medium size charities who form the backbone of our communities, are being drowned out by some of these extravagant and grossly inefficient big brand charities.  It is time a light was shone on the sector so people can see just how their hard earned money is really being spent by all charities.’

‘There are too many examples of charities of all sizes failing to remember that they exist for the sake of their beneficiaries, not the staff.’ 

‘In my view the charity sector should be regulated as much as the wider financial sector as it has an estimated income in England and Wales of £64 billion, £13 billion of which comes from government and is therefore public money. All donors, public, corporate and private need to have the information to judge whether their money is being properly spent.’