Peter Stanford: Charities can't operate like cash dispensers

The distribution of funds is more complicated and a balance needs to be struck, writes our columnist

Peter Stanford
Peter Stanford

One of the negative stereotypes that charities live with is that they raise public money and then sit on it, rather than get on with distributing it to those in need. In a small number of examples that inevitably make headlines, this accusation has been shown to be true, but in the majority of cases the criticism is wholly unjustified and based on a fundamental misunderstanding of what a charity is and of the rules that govern its behaviour.

The "raise-it-and-spend-it-at-once" expectation signifies a view of charities as being akin to cash dispensers: concerned donors put the cash in on one day, and those for whom they have given that money are able to withdraw it on the next. The charity is just a mechanism.

There have been some echoes of this expectation in the distress of community organisations representing the victims of the appalling fire at Grenfell Tower in June, which took at least 80 lives and devastated many more. The announcement by the Charity Commission that just 15 per cent of the £18.9m raised actually reached those in need by 11 August only deepened that community's visceral sense of anger and abandonment.

Complex dilemma

But, as the commission also highlighted in its statement, the various charities that have been entrusted by the public with money to help the victims must also "ensure that the funds are protected for those they are intended for". These words highlight a very real and complex dilemma for all trustees because, however immediately attractive the cash-dispenser model sounds, charities simply cannot operate in that way. Yes, when you raise money for a particular cause you naturally do so because you want to get it as soon as possible to those in need. But to make sure that happens and that the help is effective, you also have to identify the needy, assess their needs and help them plan for the short, medium and long terms. And that is complicated.

It is at the other end of spectrum from dealing with the Grenfell aftermath, but I am involved in a charity that gives financial and mentoring support to young serving and former prisoners to help them go to university as part of their rehabilitation. We run solely on donated funds and have an annual funding round for our beneficiaries. This allows us to assess every application with equal care, meet those wanting our support and then have the funding in place in time for the autumn term.

Striking a balance

Inevitably, though, long after the deadline has passed and as freshers' week looms, there are last-minute calls, emails and application forms. When we explain about the well-advertised deadlines and our process, we are acutely aware that, to the desperate person on the other end of the line, we must sound like bureaucratic robots who tie everything up in red tape. After all, they often have no other means of support and must feel as if their university dreams are slipping through their fingers.

You wouldn't be human if you didn't want to help, be flexible, short-circuit the process and make it all possible. But where would that leave good governance and our duty to make sure public money goes where it is intended and most needed?

The reality is a struggle to strike a balance, to bend where we can without starting a free-for-all that might ultimately deter donors and bring the whole scheme tumbling down. It can be painful, and some of those we have to turn down get very upset, but it is a vital part of charity work, albeit one they probably gloss over at trustee induction sessions.

Peter Stanford is a writer and broadcaster, and was a charity chair for more than 20 years

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