What will save the ‘charity’ brand?

What will save the ‘charity’ brand?

Dame Suzi Leather, during her final speech as Charity Commission chair at the Almshouses Association’s AGM, voices concerns about whether charities will be able to retain their distinctiveness as against other social organisations such as social enterprises, mutuals and co-operatives.    

As the ‘third sector’ expands to accommodate many different types of organisations there can be little doubt that that is a very real challenge for charities.

For some the issue is whether it is worth being a charity at all: whether the benefits of charitable status - and registration as a charity - outweigh the restrictions that that status brings.   Particularly when, even in these cash strapped times, access to funding need not depend upon being a charity.   For others, like the Charity Commission outgoing chair it seems, the issue is more about appreciating the distinction: whether charities will be able to demonstrate why they are different as compared to their fellow members of the third sector.

Public benefit rules, Dame Suzi Leather suggests, are a big part of what makes the difference between charities and none charities. That has to be right.

Public benefit has always been part and parcel of what charities are about.   Public benefit may have been brought into sharper focus by the 2006 Charities Act – becoming part of the definition of any charitable purpose – but it has always been fundamental.

On an individual level demonstrating delivery of public benefit has to be a priority for charities.  For the sector as a whole - if public benefit is what makes it what it is - recognising its value can only help protect the ‘charity’ brand and retain that all important public trust and confidence on which the sector depends.

What recent charity registration says about the ‘big society’.

What recent charity registration says about the ‘big society’

What do the latest figures for charity registration tell us about how the ‘big society’ is playing out?

The second Charity Commission Registration Trends Bulletin (May 2012) suggests that the appetite for creating a charity and charity registration remains strong.

The types of charity that feature in the 2,613 charity registrations in the 6 months to 31 March 2012 seem to reflect response to needs of a type expected in the face of  public spending reductions.

So what are they?  The Bulletin draws our attention to charities providing foodbanks, meeting the needs of those who are unemployed - in particular young people - and those who are socially excluded.  Charities providing education and training account for the majority of charity registrations for the period, at 57%.   The majority of charities registered overall, are service providers, at 59%.    And 36% of charities registered during the period provide advocacy, advice and information. 

Figures which may point to recent charity registrations reflecting response to current need – plugging gaps left by the withdrawal of public services perhaps?

What the figures don’t tell us is the extent to which these charities are initiated by  members of the public at a local level, as envisaged by the notion of the ‘big society’.   That said, the Bulletin does draw our attention to those recently registered charities falling under community development and those which involve promoting active citizenship in some way.   Charities of a type which may suggest that participation and engagement, within and amongst the community, is a growing reality for many members of the public at least.

We wait to see what the future brings for charity registration: whether the trends suggested by the recent figures will continue.

Fraud – how exposed is your charity?

Much publicity has been given to benefit fraud over the years and the cost to the public purse.  But the National Fraud Authority (NFA) latest 2012 estimates make interesting reading.   

Fraud within charities is estimated to cost 1.1 billion (1.7% of the sectors annual income) as compared with that estimated to be lost through benefit fraud 1.2 billion (or 0.8% of benefit expenditure).   

Charitable funds are public funds, for which charity trustees are accountable.

The figures do not point to fraud sufficient to dint public confidence in charities and the management and safekeeping of charity funds.  

Putting it into perspective the proportion of the estimated loss is very small.  But the same figures illustrate that charities are not immune to fraud, be it basic methods such as ‘skimming’ off cash collections, online techniques or ever more sophisticated techniques, such as fake fundraising events. 

 

The importance of public confidence to the charitable sector and individual charities cannot be underestimated.  It is critical to public support, whether that be donations, tax relief or volunteering.   That was borne out by the Ipsos MORI survey carried out in 2010 on behalf of the Charity Commission (to be repeated this summer).   

That survey reflected that for 96% of those asked confidence in money given to charities being used for the purposes for which it is given was a key driver.   With that in mind charity trustees would do well to be aware of the potential for financial abuse within their charity and the need to take steps to reduce and mitigate that risk.

Strong internal financial controls, as part and parcel of good governance, are vital measures charity trustees must nurture and sustain to protect charity resources.   

Basic mechanisms like proper record keeping supporting audit trails are a must.   On a practical level, think about whether it is a good idea to concentrate multiple functions with one individual, if that means that their departure potentially leaves the charity vulnerable to playing catch up with financial controls in their absence.

Plainly, this aspect is only one amongst many with which charity trustees have to deal.   Undoubtedly, demands on charity trustees become more complex in this area as in many others; keeping on their radar money laundering and the implications of the Bribery Act 2010. 

 

But, in this area, as with all elements of charity operation, practising good governance is key.   It enables charity trustees to operate the charity on a sound footing and grow the charity safely.  And, critically, it enables them to justify that all important trust and confidence amongst donors, supporters and funders, both new and old.