Transparency and accountability have become familiar buzz words around the voluntary sector, and the fundraising community has done its bit by supporting initiatives such as the ImpACT coalition and charityfacts.org. Many charities also lent their support to this month's launch of Intelligentgiving.com (Third Sector, 11 November). Like the other initiatives, Intelligent Giving's site sets out to inform the public about how charities work and "scotch rumours about charities, or put them right".
Initial reactions to the sight were positive. Its use of smiley faces to rate how good charities are at producing reports, based on the Charity Commission's Sorp criteria and the regulatory guide RS8, was welcomed by several of the charities that have been reviewed.
But Intelligent Giving hit rocky ground when it embarked on its first public assignment: pointing out the drawbacks of giving to grant-making trusts. In the run-up to the annual BBC Children in Need appeal on 17 November, the site ran an article offering four reasons why people should give directly to children's charities instead of donating to the appeal.
"Giving your cash to a grant-giving charity is, 90 per cent of the time, a bad idea," it advised. "Why? Because you pay two sets of admin costs: one to run the grant-giver itself, the other to run the charity that actually does the work." It also dismissed as "clever wording" Children in Need's claim that "every penny you give" will go to charitable work, because the appeal "invests your pennies (for six months or longer - do you want that?) and uses the interest to cover costs".
The national press picked up on the story and articles soon appeared in the Daily Mail, The Daily Telegraph and The Times warning readers that the 21-year-old yellow teddy Pudsey Bear might not be all he seems. Many newspapers seized upon Intelligent Giving's rating system, and most ran lists of 'good' and 'bad' charities. Among those named were Sue Ryder Care, the Royal Opera House and Muslim Aid.
The coverage led to a fight between Intelligent Giving and the Institute of Fundraising. Like Intelligent Giving, the institute has openly criticised charities in the past for claiming that every penny donated goes to the cause. Yet it was quick to issue a statement calling the episode a "press fiasco" - a reference to some inaccuracies in The Times article.
The institute condemned the site's methodology and metrics as "crude and rudimentary" and expressed concern that such coverage would "damage public trust and confidence in charities". It also rushed to defend its members - Sue Ryder Care, the Royal Opera House and Muslim Aid - by pointing out that all three are committed to following best practice.
"Intelligent Giving clearly doesn't understand the voluntary sector or how it raises money," says Megan Pacey, the institute's director of policy and campaigns. "The site is run by journalists who are good at press coverage and soundbites. It doesn't inspire confidence because, although its rating techniques appear to compare apples with apples, charities simply aren't homogeneous in that way, and some of our members believe the site has used its reports inappropriately and incorrectly."
David Pitchford, founder of Intelligent Giving and a former student at the School for Social Entrepreneurs, defends his work. "We have a policy of refining our criteria each year as we learn and as the public learns," he says. "We already have new criteria planned, which will be based on the work of the internationally respected accountability organisation Keystone Reporting."
Pitchford adds that he talked to sector leaders and consultants when developing the site. "We invited input about our accountability and transparency methods from the day we started," he says. "But several key figures in the sector didn't respond when we asked for their involvement."
So do fundraisers and charities genuinely support the transparency agenda, or are they just paying lip service to the principle? Luke FitzHerbert, senior researcher at the Directory of Social Change, believes charities must accept that transparency is risky. "Charities approve of transparency in theory, but are often scared rigid by it," he says.
"The unforgivable sin, in their view, is to name names rather than speak in generalities. But unless names are named, nothing is likely to happen. The headlines came about because Intelligent Giving named Children in Need. Otherwise, the site's launch would have passed without comment."
"What's more, Intelligent Giving's tone is a delight," adds FitzHerbert.
"Given the solemnity with which large charities expect to be approached, it's a pleasure to come across such a site. I couldn't welcome its arrival more."