Charities Aid Foundation rejects criticism over research methods

The Charities Aid Foundation has defended its decision to alter the definitions used in its annual Charity Trends research to bring it in line with accounting regulations.

CAF changed its definitions of voluntary income to reflect the Charity Commission’s Statement of Recommended Practice.

As a result of its action, arts and culture charities move from fifth to second in the league table of voluntary sector income.

Cathy Pharoah, CAF’s former director of research, has criticised the move because it has meant that the report identified charities’ income according to whether it is “earned” or “not-earned”, rather than according to its source.

“The voluntary income figures in Charity Trends combine private and state grants or donations, and its non-voluntary income figures combine private and state fundraised or earned income,” said Pharoah, who now works as a consultant.

“The inclusion of many publicly funded grantmakers has added £1bn of state funding to the income figure for the charitable grant-making trusts.”

As a result, Pharoah told Third Sector, the sector will no longer have composite figures for trends in the income raised by fundraising charities from private sources, whether that money comes from donations, fundraising events, companies or private trusts.

“This leaves a gap in our ability to demonstrate the added financial value that charities bring,” she said.

David Carrington, an independent-sector consultant, said: “There is always a risk in aggregating different types of income that are dif ferent in intention.” Carrington added that finding a way of unpicking the large calculations is important to discovering the basis on which the sector is funded and monitoring the trends.

However, Richard Harrison, CAF’s new director of research, said that the organisation had put a lot of thought into adhering to the Sorp changes.

“The key focus for us is that Sorp 2005 is an elegant progression because it outlines how the money comes in, rather than who it comes from,” he said.

“I think the fundamental purpose of Charity Trends is to highlight funds that come in through a spirit of voluntary donations, and we absolutely do that even if that voluntary income is from local authorities or government.”

Harrison added that CAF was definitely committed to staying with the Sorp definition of fundraising categories in future.

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