Dean Russell: Charities must find better ways to explain their spending

The fallout from the MPs' expenses scandal could affect the voluntary sector, says the head of digital marketing at Precedent Communications

Dean Russell, head of digital marketing, Precedent Communications
Dean Russell, head of digital marketing, Precedent Communications

The expenses fiasco that has engulfed Parliament has shown just how angry members of the public get when they feel their money is being misspent. Will the fallout from all of this be increasing need for transparency across other publicly funded organisations, including charities?

And is the sector bold enough to take the lead? Charities will say they are transparent in their annual reports, but we all know the average person in the street would never read these. So this is a communications challenge: it's not about making the information available, but making it digestible.

Social media are ideal tools for this. No other media make it so easy to connect with communities and allow them to ask direct questions. A great example of such transparency is the website of the Indianapolis Museum of Art. This US organisation publishes an online management scoreboard that provides a simple overview of its activities and spending: a great way to build trust and help everyone make sense of all the numbers.

There is no good reason why chief executives can't provide short online video posts outlining where money has been spent and the plans for the coming year. This would require little time or money and would be more accessible to stakeholders than company accounts. There are no strong examples of this being done, even though charities are doing a great job of using social media for fundraising and campaigning.

Working on the assumption that the expenditure of charities is fair and the processes used to manage them are rigorous, charities would hold a strong moral position in the public mind if they made these details clear and accessible. This would strengthen the sector's ability to set the political agenda at a time when politicians have been discredited.

Indeed, charities might lose out if they fail to communicate that they are transparent. It is likely that the public will start to wonder why they don't know exactly what charities are using their money for. In particular, people might question what proportion of their donations chief executives and senior management take, and if they too are claiming for first class travel and unnecessarily expensive hotels instead of giving donors' hard-earned cash to their beneficiaries.

If charities are to distance themselves from the discredited world of politics, they will have to innovate. Rather than hiding in the background, the sector needs to lead the way on transparency and start setting standards for Westminster.

FACT FILE - ROOM FOR IMPROVEMENT

Charities don't have a great record on transparency. According to donor information website Intelligent Giving, nearly half of annual reports from charities fail to provide "even a broad-brush explanation" of their income and expenditure.

A survey by the Impact Coalition carried out in February this year revealed that charities counted transparency and accountability policy as the weakest aspect of their work, with respondents awarding themselves an average score of 56 per cent for their effectiveness in the area.

And charities aren't latching on to new media as a way of improving this. Intelligent Giving says only 42 per cent of charities present their annual reports and financial statements on their websites in a way that makes them easy to find on the main page or through the search function. It adds that many charities do not make their annual reports available online at all.

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