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Is donating to large charities a waste of money?

16 September 2016

1:03 PM

16 September 2016

1:03 PM

At the height of the Ebola epidemic in West Africa, the dead and dying lined the streets, locals too scared to remove the bodies or aid the stricken for fear of contracting the virus.

Entire communities were wiped out as aid organisations came under fire for lacking a sense of urgency in the face of this humanitarian crisis.

Meanwhile, in the comfort and safety of London, the individual in charge of a leading international charity responding to the crisis was telling the readers of a luxury magazine about his ideal weekend in the capital.

This person revealed a fondness for Mediterranean food at fashionably authentic little eateries, exotic cocktails at Michelin-starred restaurants and trips to artisan bakers for fresh bread and pastries. How wonderful.

The juxtaposition between the devastating crisis unfolding in West Africa and the pampered lifestyle of gilded elites in London was unfortunate, at the very best, but indicative of the remove that often exists between large charities, the causes they are meant to service and the many ordinary people who continue to support them with donations.

The remuneration packages paid to the chief executives alone should be enough to put you off. Research last year showed that the average package paid to a CEO at one of Britain’s top 100 charities was £167,000.

The top ten enjoyed incomes ranging between £790,000 and £240,000. These people are not entrepreneurs; they have not made great sacrifices and taken big risks with their own capital to create wealth for themselves and employment for countless others. These are custodians of hundreds of millions of pounds of charitable donations.

It is not just the chief executive’s lavish pay and perks that must be funded. He or she will often have a sizeable team of well-paid directors and managers, all of whom receive London-weighted salaries and benefits.

Add the cost of gleaming grade-A office space in central London, the most expensive city in the world by some measures, and you could be forgiven for wondering whether large charities have any money left to spend on good causes.

The big beasts of the third sector have a highly questionable record on fundraising, particularly in cold-calling elderly people and pressurising them to make donations and sending out armies of ‘chuggers’ to pester shoppers and office workers with requests for money in high streets.

No-one doubts that large charities do important national and international work that could not be carried out by any other organisations. They have many brave and dedicated employees and volunteers who selflessly dedicate their lives to helping others.

Meanwhile, Britain’s smaller and less well-known charities are in great need of help themselves. These smaller organisations, which constitute 95 per cent of the voluntary sector, have been badly hit by cuts in public spending.

Lloyds Bank Foundation reported that charities with incomes between £100,000 and £500,000 lost nearly half of their income from local government between 2008 and 2013. It is unlikely they will have recovered since.

In contrast, the large charities, which enjoy incomes between £10 million and £100 million, lost just 2 per cent of their local government income over the same period.

The Charities Aid Foundation has warned that charities across the country are fighting to stay afloat as they try to meet ever-rising demand. One in five smaller charities report that they are struggling to make ends meet. So much for David Cameron’s Big Society.

By and large, Britons are a compassionate and generous lot. Two thirds of us gave money to charity last year, equating to nearly £10 billion. Donating is a very common way of giving something back to others less fortunate, both here and overseas. It is also tax efficient.

But readers of this column should spare a thought for the smaller charities that do not enjoy the profiles – or the perks – when they decide who ought to get their hard-earned donations.

Bernard Ginns is the founding director of www.branksomepartners.com and was Business Editor of The Yorkshire Post from 2008-16

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