The philanthropist Gina Miller has urged the Charity Commission to cap the amount charities are allowed to spend on running costs and administration, and claimed that the voluntary sector has too many "careerists" who simply want to climb the ladder to receive higher salaries.
The founder and chair of the grant-giving foundation Miller Philanthropy, which was launched in 2009 and gave out grants totalling £290,419 in the year to September 2011, said she had been shocked to find big charities spending between 50 and 70 per cent of their income on running costs and administration.
Miller, whose foundation funds small charities and individuals to carry out community projects, told Third Sector that spending between 12 and 25 per cent of income on administration costs was acceptable.
"It is taking away from the pot that is given to charity from individuals in the UK," she said. "A significant percentage of that is not reaching the charitable work. That is almost exploitation of people’s goodwill.
"Charities should be solving problems, not creating business-like structures that can go on infinitely."
Miller said that organisations could operate efficiently by spending between about 12 and 20 per cent of their income on overheads "without having 17 people in their fundraising teams".
She said the commission had told her that a cap might discourage people from setting up charities and that administration costs were a part of charities’ overall work. She said this was a weak response.
Miller also criticised the salaries paid to some voluntary sector employees and said there were too many "careerists" in the sector, who moved between roles simply to climb the career ladder and get larger salaries, not because they were passionate about the causes.
"There are some quite shocking charities paying six-figure sums and bonuses," she said. "It is extraordinary. People want to do good. The nation gives a huge amount to charity, and I think they would be shocked if they knew all of it was being used on someone’s wage package."
Miller said there was too much focus on impact measurement and spending money on consultants. Smaller charities could be missing out on funding, she said, because they were unable to spend money on staff to write business plans and funding applications.
"Small and medium-sized charities won’t get funding and support because they cannot do as much marketing to attract donations," she said. "They will disappear, and who will fill the gap? We have to tell people about smart giving, which looks at how much is going to the end cause."
Gina Miller is married to Alan Miller, who made his fortune in hedge-fund management. Her career has involved events and marketing roles. The couple recently founded SCM Private, which is described on its website as "a progressive and honest investment management organisation".