Many of the largest charities in England and Wales fail to be clear about how much public money they receive, and should be more transparent in the name of democratic accountability, according to a new report.
Transparency Begins at Home, published today by the right-leaning think tank the Centre for Policy Studies, looks at the 50 largest charities in England and Wales by incoming resources, the proportion of their income that comes from public sources and the proportion whose source cannot be identified from their accounts.
Of these top 50 charities, 32 indicate in their reports that they receive public money, but do not give a specific overall figure. In the case of two of those – the Trustees of the London Clinic and the examinations body AQA Education – the report says that more than 99 per cent of income might come from public sources, but this is not made clear by their accounts. There are a further four charities – St Andrew’s Healthcare, the Anchor Trust, Wakefield and District Housing and the Royal Mencap Society – where the unclear income is more than 90 per cent, and another nine where it is more than 50 per cent.
The report concludes that although these 50 charities declared a total of £3.1bn, or just under a quarter of their funds, as coming from public money, the amount of unclear income means that the true figure could be up to £6.5bn.
It says that this lack of transparency is important for three reasons. The first is democratic accountability – the report says taxpayers have a right to know how much of their money is being spent, and to hear it from the charities themselves.
The second is a concern that a lack of transparency might mask the fragility of some charities – the report says: "We saw in the financial crisis what happens when a sector’s accounting practices obscure the underlying robustness of its sources of income." Finally, the report says, this raises questions about the blurred lines between the public sector and charities that deliver public services.
"Once a private charity has undertaken services for a long time while dependent upon receiving public funds, the line between the public and private sectors begins to blur," it says. "It blurs in two ways. At some point, does the organisation cease to be a private body? More fundamentally, does it cease to be a charity?"
The report calls for greater transparency, but says the new Sorp standards for accounting are unlikely to achieve this and will "only succeed in shifting unquantified uncertain items from one part of the Statement of Financial Activities to another, or perhaps defer a failure to disclose into a later year".
Commenting on the report, Karl Wilding, director of public policy at the National Council for Voluntary Organisations, said: "Full annual accounts for all charities are in the public domain. The standards are becoming more rigorous again this year with more detail than ever before routinely becoming public.
"We believe charities should operate to the highest standards of transparency – but we should remember they are already far more transparent in these terms than the private sector, while the government still has more to do to shed light on how it spends money on outsourced public services."
From 2015, charities in England and Wales will have to declare how much money they receive for delivering services for central or local government, after changes to the Charity Commission’s annual return.