In 1984 Band Aid was founded by Bob Geldof and Midge Ure to raise money for anti-famine efforts in Ethiopia by releasing the song “Do They Know It’s Christmas?” for Christmas that year. In November 2014 a new version of the song was recorded by artists under the name of Band Aid 30. The single “Do They Know It’s Christmas?” sold over two million copies worldwide and raised more than $24 million. There was also a Band Aid 20.
There are more than 195,000 charities in the UK raising close to £80 billion a year. They employ a million staff. Some charities claim that almost 90p in every £1 donated is spent on ‘charitable activities’. Is it? Where is all this money going?
Many charities spend at least half of their income on management, strategy development, campaigning and fundraising. In England and Wales there are 1,939 active charities focused on children; 581 charities trying to find a cure for cancer; 354 charities for birds; 255 charities for animals, 81 charities for people with alcohol problems and 69 charities fighting leukaemia. All have their own executives, administrators, fundraisers, communications experts and offices, but few will admit they are doing exactly the same thing as other charities.
Take the case of Ethiopia. Two decades ago there were 70 international charities operating there, today the figure is close to 5,000. (Why does Ethiopia need so many?)
All charities with an income over £25,000 have to file independently audited accounts with the Charity Commission at a cumulative cost of £252 million in accountancy fees alone.
The Charity Commission for England and Wales claims that £53 billion of the £63 billion raised is spent on what it calls ‘charitable activities’, an impressive £8.41 of every £10 raised. But its definition of “charitable activities” is loose. Spending on “charitable activities” is defined in accounting rules as “all costs incurred by a charity in undertaking activities that further its charitable aims for the benefit of its beneficiaries”.
The RSPB hit the headlines after Sir Ian Botham said it was more interested in politics than wildlife. Is that true? Like many charities, the RSPB generates income from commercial activities – £21 million of its total £122 million income in the latest accounts.
But the costs of its commercial activities are £18.4 million, so only £2.6 million of the £21 million raised by selling things goes into the kitty for charitable purposes and administration. Of the £122 million total, the RSPB spent £115 million and retained £7 million for future use.
The £115 million can be split into £32.5 million generating its income and £82.6 million on what it classed as ‘charitable spending’ – roughly 72 per cent. But what does it class as ‘charitable expenditure’?
Some £4 million went on managing its membership, which raised £32 million. Most would regard this as an administration cost, rather than genuine charitable expenditure. Another £14.2 million was used for ‘Education and Communication’ and £34.7 million on ‘Research, Policy and Advisory’ – nearly £50 million on what could loosely be described on campaigns.
The final £29.6 million – just £2.57 of every £10 spent – was actually used for the proper front-line work that many donors might normally associate with the RSPB.
Is this why you donate money to charities? So that £2.57 of your £10 hard earned can go where it is needed the most?
Oxfam is another charity stalwart, which claims on its website that it spends £8.40 of every £10 raised ‘saving lives’.
But it’s entirely possible, even probable, that only about half the money raised is actually used for ‘saving lives’. If every working adult and pensioner in Britain contributed £10 per month to charity, the money raised probably wouldn’t be enough to pay the salaries of the executives of our registered charities.
Charities have many ways of raising money but most controversial is ‘Face to Face’ fundraising, often called ‘charity mugging’ or ‘chugging’. Chuggers aren’t permitted to take cash directly from us. Instead they usually try to get us to set up a direct debit giving say £5 or £10 a month.
Most chuggers work for chugging agencies and are typically paid between £7.50 and £9.50 an hour. Charities will usually pay out between £80 and £120 for each person who agrees to set up a direct debit. This means that pretty much all of a direct-debit donor’s first year’s donations, and sometimes almost two years’ donations, will go to the chugging agency and the chugger.
Does this mean you should stop donating to charity? No. What I would suggest is that you check where your money is actually going before donating. You can do that on the aliveandgiving.com website. Or you could donate your time to your charity of choice by offering your services voluntarily. Your choice, but choose wisely.