Book sparks row over fundraising cost ratios

Sector analysts have attacked a high-profile book launched last week, which shows organisation's fundraising costs as "irresponsible and "simplistic".

The Major Charities, an Independent Guide reveals figures, including fundraising costs, from 200 of the largest charities. The total fundraising expenditure is shown as more than £450 million and total donations as more than £2 billion.

The Guardian sparked anger last week when it used information from the book to rank 12 organisations in a table. The bodies argued that such treatment left no room for explanation.

Charlotte Goodman, head of marketing and public affairs at Action for Blind People, said: "The article was very negative, it doesn't allow for any context. The book though is actually positive. Our issue is not with the figures but with the lack of context in the article."

But Paul Palmer, professor of charity finance at Southbank University, said: "The methodology is totally inadequate. It's outrageous they published this after it has been shown it's so flawed."

He argued that the information in the book, published by the Directory of Social Change and based on charities own accounts, does not account for variations in what organisations classify as fundraising income or costs.

WRVS, for example, shown by the report to spend £1.17 for every £1 raised, explained that the figure for their fundraising expenditure also included publicity costs. This was not the case for all organisations featured.

Book co-editor Luke FitzHerbert acknowledged each charity's situation was different but argued that charities did not explain their fundraising costs adequately. "As for the figures being simplistic, they are taken from reports and accounts of charities,

he said.

Cathy Pharoah, head of research at the Charities Aid Foundation, argued that the methodology used in the book was "simplistic", and that the information charities are required to give in their accounts is not adequate for compiling this sort of guide.

Other charities listed in The Major Charities include Action for Blind People, whose costs are given as 73p in every £1 and Action Research with a fundraising cost ratio of 61p in every pound.


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