There are "mind-blowing" levels of waste in the charity sector and charities need to show they are careful with spending other people’s money if they are to attract major donors, a wealthy philanthropist has said.
John Roberts, founder of the electronics website AO.com, was speaking as part of a panel about philanthropy at the Institute of Fundraising’s annual convention in London yesterday.
He said charities had to show they understood business principles and demonstrate that they could use donations effectively if they were to attract entrepreneurs.
"The waste in the charitable sector is mind-blowing, as I see it," he said. "There are far too many people who don’t respect how hard it is to earn that amount of money.
"That doesn’t mean doing things cheaply – quite the opposite actually. It means investing properly. It doesn’t mean having swanky offices, but it doesn’t mean having really shit offices. It means just spending money as if it was yours."
Roberts also said that there were parallels between creating a new charity and a new business, and that the most important factor was overwhelmingly passion for the cause.
"If you have heart, passion and soul, and you’re willing to do whatever it takes, then you have a chance," he said. "I think it is the same in a philanthropic sense.
"The more we can connect people with what matters to them, the better that relationship tends to be."
Charities should be honest and quick to give bad news to donors and funders, Roberts said, adding that many business people would be used to receiving bad news and would be keen to help the charity out of difficult positions.
Speaking on the same panel, Kate Kuper, board member at the development organisation BRAC UK, said that funders should be willing to provide unrestricted, long-term funding to charities to remove the pressure to fundraise constantly.
"The funding community is doing a massive disservice to the charitable sector by giving small grants for very short periods of time," she said.
"I am a big believer that we should take a more business-like approach and ask people for a business plan.
"I think you have to push back on funders and ask them to do it as a journey and in partnership with you, and give you money into your business plan."