Tabloid understood to be working on critical story about charities' admin costs

Sources told Third Sector that the Mail on Sunday had planned to run a story this weekend about cost ratios in the charity sector, but it appears to have been delayed

The Mail on Sunday is believed to be developing an article about cost ratios in the charity sector despite previous widespread criticism about the use of the method to analyse charities’ performance.

Sources told Third Sector that the newspaper had planned to run a story about cost ratios in the charity sector this weekend.

Part of the article was to include comparisons of the amounts that major charities spent on back-office functions and administration compared with their spending on front-line activities.

But Third Sector understands the story did not run this weekend after discussions between the newspaper, charities and charity sector bodies.

Voluntary sector sources said, however, that the article had not been dropped and might appear this coming weekend.

The use of cost ratios as a way of demonstrating a charity’s effectiveness has been repeatedly debunked by sector figures in the past, particularly after the release of a series of reports by the True and Fair Foundation in 2015 and 2016.

The foundation, run by the philanthropist and Brexit campaigner Gina Miller, had claimed that more than 1,000 charities spent less than 50 per cent of charitable funds on "charitable activities".

But the reports were widely condemned in the charity sector for a series of basic errors and misunderstandings about the way charities operate, with the National Council for Voluntary Organisations calling the report "deliberately misleading".

An analysis of the True and Fair Foundation’s report by Pesh Framjee, global head of non-profits at the accountancy firm Crowe, said that cost ratios were a poor way of demonstrating charities’ effectiveness because there were "too many issues to factor in that can make such comparators unworkable".

A new website, called How Charities Work, was launched by the NCVO after the True and Fair Foundation’s report to highlight how charities operate, including information about cost ratios.

Aidan Warner, senior external relations officer at the NCVO, said in a statement today: "The public understandably want to get a sense that you spend money effectively, but formal accounts can be difficult to make sense of.

"So it’s a good idea to present some key figures online, as many charities do."

The Mail on Sunday did not respond to a request for comment before publication of this story.

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