The Intelligent Giving Blog

The last blog

Richard Marsh — Tue, 25 Aug 2009 12:15:35 +0100

Well, it was worth a try.

A couple of months ago I arrived at Intelligent Giving as Interim Director. The brief? To address a chronic lack of financial resources.

We weren’t credit crunched, the problem goes back much further than that and relates to the challenges faced by analysts in the sector to fund their work.

We may not have been able to save IG as an independent charity, but the good news is that the IG brand, website and methodology are being taken over by our colleagues at New Philanthropy Capital.

Before the icy waters of indifference close over our heads let’s bank what IG has achieved and make sure that those responsible get some kudos. At its heart, IG has been about the charity profiles and a carefully honed and tested method of making sure that these are fair and consistent. These profiles may not be what IG is remembered for, but I have no doubt that it’s our best work.

We’ll be remembered for royal spats with charities and, in particular, fundraisers, as we tried to make the point that donors matter and they are intelligent enough to be trusted to make informed, searching, decisions about the way they spend their own money on the causes they want to support and the difference they want to make. You will now never enjoy our campaign to have the equivalent of the Mail or Telephone Preference Services for households who don’t want Door to Door Fundraisers to call!

So, farewell then! And thanks to the interns, the noble lead researchers, the people who kept the website together and tried to make the books balance, the trustees and other donors who dug deep in their pockets. Farewell to our sparring partners and our colleagues in the world of charity analysis.

Above all, farewell to the thousands of donors who have used IG to help them make decisions about their giving – we did this for you. Valete!

Press Release: New Philanthropy Capital to take over the work of Intelligent Giving

Richard Marsh — Wed, 12 Aug 2009 12:01:30 +0100

New Philanthropy Capital (NPC) will preserve the work of Intelligent Giving, the charity evaluation and donor advice website, after it winds down later this month. NPC will take over the charity’s brand and website and look for ways to develop its message on transparency in the charity sector.

Intelligent Giving’s website features over 500 UK charities, assigning them scores for the quality of reporting and transparency of their annual report and accounts. The charity has made a name for itself for its willingness to ask difficult questions and for championing the role of the thoughtful donor. At the same time, it has sought to close the gap in public understanding of charities and the way they work.

‘Intelligent Giving has been doing good work in a difficult market,’ says Martin Brookes, NPC’s chief executive. ‘It has helped to push forward the agenda on transparency within the charity sector, and we are excited about having an opportunity to build on what it has done.’

Intelligent Giving was founded in 2006 by two former journalists, David Pitchford and Peter Heywood. Pitchford says of the decision, ‘NPC is the perfect choice to continue developing the work of Intelligent Giving. Our organisations share a mission: to increase the effectiveness of the charity sector. We are pleased that NPC has stepped up to the plate to continue the work we have started.’

The move is supported by the Charity Commission, whose chief executive, Andrew Hind, said, ‘Organisations providing information about and analysis of charities are an important part of increasing transparency and accountability to the public, and can help make charities more effective. Such initiatives between charities are to be welcomed, because they add to the range of available analysis about charity activity.’

Public Benefit and True Transparency

Kit Patrick — Thu, 30 Jul 2009 12:29:53 +0100

In recent weeks, newspapers have been full of confusion about the new 'public benefit' rules for charities. For example, The Daily Mail claims that:

“For the first time, this law put the burden on charities to show they were delivering the 'public benefit' they had previously been assumed to embody.”

Not exactly. Most charities have long been required to demonstrate public benefit (although some which were previously exempt now no longer are, such as schools and churches) And, although some details still need to be hammered out, that seems fair enough to me. After all, charities are granted many millions of pounds in tax breaks every year. The least taxpayers could expect in return is for charities to show whether and how they pursue charitable goals.

Even charities seem to be confused about the new rules. In recent months, we've found 'public benefit statements' cropping up in charities' annual reports. These are typically one or two sentences of convoluted jargon:

"In accordance with Charity Commission general guidance on public benefit, the trustees confirm that the impact of our work on beneficiaries is a key criterion when deciding what activities to undertake."

(Action Aid Report 2007)

Such statements are useless. They are not required by the new rules, and are not endorsed by the Charity Commission regulatory body (we checked). More importantly, they cannot replace a detailed account of what the charity has actually been doing for the public benefit, something charities are required to provide.

But there's good news: the vast majority of the top 500 charities we study do provide some account of what they have been doing for the public benefit. However, many need to provide much more detail. For example, only 40% compare their objectives and achievements for the year, and far fewer (27%) set numerical targets. More transparency about public benefit please!

I hope that charities take advantage of the recent interest in public benefit to show in more detail how they really benefit the public. In the meantime, let's get rid of these legalistic statements. They are a waste of ink, and no replacement for true transparency.

Transparency: the way forward

Richard Marsh — Tue, 21 Jul 2009 14:36:27 +0100

A recent blog by David Weinberger argues the transparency is the new objectivity. I can’t say that I care much for his title, transparency isn’t the new anything. But, his argument is that claims that anything can ever be wholly objective and consequently dependable have been shown to be specious and that ‘transparency gives the reader information by which she can undo some of the unintended effects of the ever-present biases. Transparency brings us to reliability the way objectivity used to’, seems to me both interesting and useful.

Admitting that whenever we write or comment on something we can never claim objectivity because there are always biases at work whether or not we are aware of them, is pretty first-year undergraduate stuff. But it’s always useful to keep reminding ourselves about it. But, can we really say that transparency, by which Weinberger means linking to the sources of information upon which we rely to make assertions, brings with it greater reliability?

I think that we probably can. Undergirding everything that we do here at IG is the simple proposition that charities, which have a pretty privileged position in our society, should be transparent . We don’t have an overly complex definition of what transparency might mean, Anna Florini of the Brookings Institution defines it as, ‘The release of information that is relevant to evaluating…institutions’ and that pretty much sums it up.

When IG evaluates charities, which we do with great care to ensure fairness and consistency, we do so using a 43 point framework that has been tried and tested by completing more than 1800 profiles. When we ask searching questions about charities and their activities in our blogs, it’s usually because it really is not clear what exactly is going on.

In my time at the ImpACT Coalition, and now here at IG I have been disturbed that charities really haven’t ‘got it’ that decent transparency builds trust and signals tangible commitment to making change happen and is a reasonable indicator of a charity’s effectiveness. And that’s why IG is in business, and why I’m glad to be taking up the reins.

Why do fundraisers think they’re so good, when they’re not?

Adam Rothwell — Mon, 06 Jul 2009 17:52:13 +0100

A mystery lurks at the heart of the fundraising profession. If fundraisers are half as good as they think they are, then why don’t they raise more money?

It’s an important question – but one which almost never gets asked. The (admittedly slightly rickety) statistics show that overall levels of giving in the UK have remained static for the best part of a decade, or have at best only risen in line with inflation.

Fundraisers have, in other words, failed.

You’d think this might trouble a few fundraisers, every now and again. But it doesn’t seem to. And in my view, that’s worrying.

Why? Simply because if charities are serious about changing the world – which they say they are – then they need to raise more cash than they do at the moment. The average charity’s mission statement has zero chance of being fulfilled if giving remains at its current levels. All those good intentions will go to waste if they can’t be adequately funded.

Of course, fundraisers aren’t all bad. They’re good at – and sometimes even seem to specialize in – coming up with new ways of squeezing money out of people. But the vast majority of these methods seem to shift money from one charity to another, rather than increasing the overall number of donations. I don’t know why this is, and neither, so it seems, do most fundraisers.

Whatever the reason for giving’s stagnation, the reasons are sure to be complex. And that means, in my view, that it’s time for a debate. Fundraisers should start asking the difficult questions about why more people don’t give, and what should be done to change that. Otherwise, fundraisers will continue to specialize in moving money from one charity to another.

The Smile Train: don’t be fooled by its marketing spin

Adam Rothwell — Wed, 24 Jun 2009 10:51:56 +0100

The Smile Train, which performs operations on kids with cleft lips and palates in poor countries, markets itself as a new breed of hyper-efficient charity. It claims you can change a child’s life forever for as little as £150. And it boasts that its overheads are less than one per cent of its total expenditure.

But there’s a problem with many of these claims. In my view, they’re probably nonsense. Here’s why.

The ‘less than one per cent overheads’ figure is simply untrue. Our profile of the Train shows that it spends roughly 40 (yes, forty) per cent of its income on marketing and administration. One lucky Train employee trousers £97,000 alone each year. How can we be so sure we’re right and the Train’s publicity is misleading? Simply because our figures are taken directly from the charity’s audited annual accounts, and the ‘one per cent’ figure on the Train’s website isn’t attributed to anything.
It’s difficult to know what the Train is actually doing with your money. The Train’s annual report is amongst the least transparent I’ve ever read. According to this document, the Train has two sources of income: cash from donations, and cash from its parent charity in the US. It then spends 40 per cent of this on admin and fundraising. The rest then gets transferred back to the States, and to the parent charity. It’s very hard to find out what happens next – though the money does get spent on cleft operations at some point down the line. But the reason for these international bank-transfers is hard to fathom, without further explanation from the charity.
It’s hard to find any evidence to back up the Train’s claim to be hyper-efficient. It is possible that a charity with 40 per cent overheads is efficient. But that sort of spending also needs some proper explanation. And although the Train’s website is extremely keen to make sweeping claims regarding the Train’s brilliance, it doesn't contain any evidence to back these up. The Train’s annual report is dreary and uninformative, and the website is devoid of footnotes or links to hard evidence.

It may be that the Train is merely lazy, rather than deliberately seeking to mislead potential supporters. I’d be very happy if it came forward with evidence to back up its claims. But until that happens, the Train looks like a charity to steer clear of.

Nerd corner: more on the Train's accounts

The Train’s accounts show that it received restricted donations of £4,374,311 from its parent charity, The Smile Train Inc., in the year to 30 June 2008. Note 9 in the accounts for this year show that these donations were restricted to be spent on “non-programme expenses, such as fundraising and support costs.” Note 10 elaborates on this theme. It states, “All funds donated by the public are designated to be donated to The Smile Train Inc. for inclusion in their direct charitable expenditure.” Aficionados of charity-accounting law will recognize, however, that these donations are merely designated rather than formally restricted – meaning that the charity may spend donors’ cash on anything it desires (within its objects), and is not legally constrained by the intention outlined in Note 10. This failure of the Train to restrict donors’ cash is perplexing.

These notes also cause problems on a level above that of accounting procedure. It is possible to come to an understanding from the Train’s US website that the charity’s founders commit to paying for the charity’s overhead costs. This may account for the £4.3m restricted donation Train UK received in 2007-08. This may also explain why Note 10 mentions the non-binding designation applied to supporters’ gifts. But the reason for the international bank-transfers between the UK and US brances nonetheless remain a mystery. Even if the charity’s founders are paying the UK Train’s overheads (which is possible), this doesn’t make the charity efficient. It would still be the case that 40 per cent of the Train’s UK cash is spent on overheads – a figure which demands explanation, and an explanation which the Train fails publicly to provide.

Final thought: the realm of the possible.

To put the Train’s accounting in perspective, it’s interesting to ponder what the Train could be doing with donors’ cash. It is possible for the Train to take this money, send it to the US, and for the US charity to send it back to the UK, restricted to be spent on admin and fundraising. As I say, this may not be happening. But it could be – and until the Train becomes more transparent, we’ll never know if it is.

The Icelandic banking collapse and charities: stop moaning

Adam Rothwell — Mon, 22 Jun 2009 11:36:19 +0100

When Iceland’s banking system imploded in October 2008, charities with investments there lost about £80m. Ever since, they’ve been trying to get that money back. But last week the government ruled that charities would not be compensated for their losses. If they’d invested money in Iceland, the Treasury said, they’d never see it again.

You’d think that, on hearing this news, the charities affected would get busy fundraising to make up their losses – and take the decision graciously. After all, companies in a similar position never even had a chance of getting their money back.

Instead, however, the charities have got cross. Very cross. In an astonishing turn of events, the charities have lashed out at the Treasury for its supposed meanness. The boss of Cats Protection, one of those affected, says he is “absolutely furious” at the decision. The hospice Naomi House’s CEO said that she was “thoroughly disgusted” on hearing the news.

For my part, I am repelled by that attitude. The charities seem to think that – purely because they are charities – us taxpayers owe them something. But this is self-evidently an unreasonable demand. Why do charities feel entitled to make it?

When asked, the charities have no good answer. But they do have excuses (PDF). First, they mumble that their voluntary nature makes them ill-placed to make investment decisions. But they ignore the fact that the Charity Commission near-as compels charity trustees to take professional advice when faced with such knotty problems.

Next, they say that they do good work that’s put in jeopardy by the losses. That’s true, but does nothing to explain why taxpayers should stump up the missing cash.
And finally, they assert general moral authority. What sort of country is it, they ask, which lets charities suffer from their own bad decisions?

These arguments are entirely bogus. Charities spend a good portion of their collective existence trumpeting their independence from the government, flaunting it as one of the voluntary sector’s key strengths and defining characteristics.

But when things go wrong, they seem to say, this much-trumpeted independence must be put to one side. When charities make foolish decisions, they argue, the government – not the charities themselves – must bear the consequences. This is hypocritical. And it demonstrates a self-righteous attitude that does nothing but damage those charities’ names.

Is giving to charity shops intelligent giving?

Kit Patrick — Fri, 19 Jun 2009 12:30:49 +0100

Charity shops are the place to be this summer, with Mary Portas, Queen of Shops, overhauling one of Save the Children’s shops for TV. The Sun called it "the coolest shop in Britain". Visitors are also brimming with enthusiasm: "We both came here with the idea that we were going to spend while giving to charity. That encouraged us to come out and shop." reports one pair.

Ordinarily, that comment would be worrying. Using charity shops doesn’t generally add up to “giving to charities”. After all, most charity shops still spend most of their income on rent, salaries and the like, with only a small proportion going to good causes. Our brief survey of almost 60 large charities with shops in 2007 showed that for every £1 spent in a charity shop, only 18p goes to good causes. Other surveys put the figure a bit higher, but it's widely agreed that Charity Shops just aren't an efficient way to raise money for charity. Also, there’s better ways to get rid of your stuff for good causes (see our new charity shops and gift catalogues page for details.)

So buying or donating to a charity shop shouldn’t generally be thought of as equal to giving to the charity. But perhaps Mary Portas’ shop is an exception. During her reign, the shop’s income more than doubled. It's been so successful that Save the Children has already agreed to extend the Portas model to their other shops. But, as has been pointed out by others, Mary Portas' changes to the charity shop have hardly been revolutionary. There are other well-organised charity shops out there, run by equally determined and smart people. But the charity shop world is tough, and some of these still struggle to make much profit.

So I will wait and see how Save the Children’s shops are doing after all the media coverage has died down. Let’s hope they keep income up and expenses down, and become an efficient way to spend money on good causes. Until that's proved true, I'll keep shopping at charity shops for the recycling and the cheap, off-beat fashion. But I won't think of it as doing my bit for charity.

p.s. It’s worth adding that there’s a risk to adopting the Portas model: suppose charity shops manage to raise prices. They might only be able to do so only by raising the costs the shop has to pay (e.g. by hiring new professional staff), and then they wouldn’t necessarily be a more efficient way to raise money for charity. Even worse, charity shops would no longer be a good source of cheap goods for the needy in the local community.

CEO expenses are the least of charities' transparency worries.

Sarah Hedley — Mon, 08 Jun 2009 17:26:07 +0100

A debate has kicked off in the charity world about whether, in light of the MPs’ allowances scandal, charity Chief Execs should be disclosing their own expense claims. The argument is that the public have a right to know how charity CEOs, just like MPs, are spending their cash.

And according to John Tate at the Charity Finance blog, CEOs’ records on expenses are not all good. There is apparently a wealth of posh wine, laptops and business class train tickets to rival MPs’ duck houses, moats and toilet seats.

Clinging onto the Daily Telegraph’s coat-tails this way is understandable, but (to mix my metaphors) a massive red herring. The focus on expenses ignores a much bigger – and more important – problem: that the standards of transparency within the sector as a whole are unfortunately low.

Just look at our charity profiles. Never mind the details of the CEOs’ expenses, nearly half (49%) of charities’ annual reports fail to provide even a broad-brush explanation of where their money came from, or how they spent it.

It’s not just charities’ finances where transparency is lacking either. 62% of charities fail to give an accurate report of their activities by not acknowledging problems they had in the year. Astonishingly, a small minority of charities (11%) don’t reveal how their work has helped their beneficiaries. And hardly any charities successfully talk about the impact they’ve had on the world.

Events at Westminster should act as a spur to increase the transparency of the charity sector. But we need to make sure we get answers to these bigger, more basic questions about how charities have used donors’ money to bring about positive change first. Fussing over how often a CEO claims for a bottle of wine is, in most cases, the least of the sector’s worries.

Richard Marsh to take the helm at Intelligent Giving

Adam Rothwell — Thu, 28 May 2009 10:08:43 +0100

Dr Richard Marsh, formerly Director of the ImpACT Coalition of charities, is to take over from me at Intelligent Giving on 1 July. I, for my part, am changing careers: from September, I’m going to be a history teacher at Oakham School in Rutland.

I’m thrilled that Richard will be joining IG. He’s the perfect person to lead our project to overhaul the way we rate charities, and will be able to bring much both from his experience running an international charity, and from his time at ImpACT – where he promoted transparency and accountability in the voluntary sector.

IG’s trustees are just as happy as me. Neill Ghosh, the chairman, said that IG is “extremely lucky that Richard will be able to take Adam's place. Richard’s skills and experience make him the perfect person to take forward our ambitious agenda, improving both charities and the way people give.”

My last day at this office will be on 17 July, after a brief hand-over period to Richard. But before I go, I hope I’ll have a chance to write some more on this blog. After all, I’d hate to leave charities thinking that they had no further room to improve.