Free financial reports showing how a £1 donation would be spent on beneficiaries, fundraising and administration by 10,000 charities have been made available as part of an effort to dispel misconceptions about how charities spend their income.
The reports, available to download through the online giving platform Charity Choice, contain details on how much every £1 spent on fundraising generates in income for the top 10,000 UK charities by income.
The reports also say what each charity’s income was over the past five years and will benchmark its spending against the rest of the sector. They are available to download on charities’ profile pages in the Charity Choice directory.
Charity Choice said it developed the reports – which use information from each charity’s filed accounts from the financial information website Charity Financials – to provide more transparency in the sector and improve public perception of charity spending.
Tanya Noronha, publisher of Charity Choice, said: "We noticed that there have been a lot of questions in the media this year about how charities spend their money, with plenty of opinions being offered but not much hard evidence.
"We wanted to stand up for charities and help them demonstrate that a huge proportion of their income does go directly towards the causes they serve. These reports also give charities a platform on which they can communicate with supporters to explain why they need certain running costs, and the difference that all donations really do make."
Asked for his opinion, Mark Astarita, director of fundraising at the British Red Cross, said that transparency was a good thing, so if the reports helped donors make more informed choices, that was to be lauded. But he questioned how useful the reports would be because, he said, giving was usually prompted by an emotional response rather than facts and figures.
Joe Saxton, co-founder of the consultancy nfpSynergy, said that the there was no agreed definition of what represented running costs, so they were almost impossible to compare.
He said that the reports could go further in showing, for example, the number of employees paid more than £60,000 a year and what the chief executive was paid.
He said that users would be likely to be deterred by having to enter their name, phone number and email address in order to access the information in the reports, "particularly when it isn’t that different from the information you can get from the Charity Commission website".
Another senior fundraising source, who did not wish to be named, said that providing a breakdown of charities’ expenditure in this way was a highly dangerous move that could give a "really wrong picture" to members of the public who did not realise the importance of investing heavily in one year to recruit donors for long-term benefit. "Real comparisons can be gained only over a longer period," he said. "Transparency is crucial but only helps if it on a real comparative basis."
Charity Choice is encouraging charities listed on the site to make use of the facility to comment on the data for their organisations.