Stephen Pidgeon: The requirements of the Sorp are a brake on fundraising

Inflexible accounting practices mean fundraisers cannot tell someone exactly what their money would be spent on; and donors are getting fed up with it, writes our columnist

Stephen Pidgeon says fundraisers must phrase and ask in a bland way in order for the donation to be used as unrestricted funds
Stephen Pidgeon says fundraisers must phrase and ask in a bland way in order for the donation to be used as unrestricted funds

Ray Jones has just retired. He was the policy accountant at the Charity Commission; not perhaps a job title to send you into raptures of interest. But before he stepped down, he wrote an article for Third Sector of the sort you'd expect from the world of charity accounting. He condemned the growing trend of "creative accounting" - the sort of practice that hides fundraising costs in charitable activity. OK, total transparency is right.

The article was about the new Statement of Recommended Practice with its "tight control" and "firm brake". Frankly, I despair! Here is a man who is clearly influential in charity finance director circles preaching the one-way-only, do-it-by-the-rules form of accounting that is a major handicap to fundraisers as supporters - rightly - become more demanding.

Charity accountants seem to be obsessed with the Sorp and assume it's the only set of accounts needed

For years, they have been fobbed off with messages like this: "Your £100 donation may ensure that a child in Malawi has an education or a similar project that your gift might be diverted to, at the whim of the senior management of this terribly important charity you are supporting!" I am exaggerating, of course. But if the retiring Mr Jones is getting upset because a few charity accountants are creative, then I'm getting upset, and tens of thousands of fundraisers are also getting upset, that we have to phrase and ask in a bland way in order for the donation to be used as unrestricted funds. Why? Because some darn bean counter requires that we do it that way.

Enough! It doesn't have to be this way. Are charity accountants just unwilling to create their accounts in different forms for different purposes? They seem to be obsessed with the Sorp and assume it's the only set of accounts needed. No accountant in the commercial world would do this. There are accounts for HM Revenue & Customs (probably the nearest thing to Sorp), for the City; there are management accounts, and so on.

In one form of management accounts, the fixed costs (for heat, light and administrative staff) are spread across the product costs so management understands the actual expense of producing, marketing and administering one widget. That's the equivalent of charities producing accounts that allocate all the fixed costs - the ones those "unrestricted funds" have to pay for - across all project-delivery costs.

Overnight, that would wipe out the necessity of raising unrestricted money. We could say to a supporter: "Your £100 donation will, it really will (not might) ensure that a child in Malawi will go to school." Now, the cost of that child going to school will go up by a lot, to cover the costs of the fundraiser who brought the money in, the accounts staff who counted it, and so on. But then we wouldn't have to hedge and prevaricate about exactly what the donor's money would buy. Increasingly, our donors are getting fed up with it.

Perhaps Mr Jones will be replaced by someone who understands that Sorp accounts have one purpose while other requirements demand other sets of accounts. That way, we can avoid having to use "creative fundraising statements" to persuade donors to give money to fundraisers. And we'll raise more money that way!

Stephen Pidgeon is a consultant and a teacher

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus