How top charities spend £226m on fat-cat pay, spin doctors and other running costs


Britain's biggest charities stand accused of 'misleading' donors

Britain's biggest charities stand accused of 'misleading' donors

Britain’s biggest charities stand accused of ‘misleading’ donors

Britain’s biggest charities stand accused of ‘misleading’ donors by including money spent on executive pay, public relations and support services in the sum they say goes to the causes they represent.

Critics say the practice – which is widespread, including at household names such as Save the Children, Cancer Research and Oxfam – lets organisations exaggerate how much of their income goes to frontline causes. 

A Mail on Sunday investigation found that ten of the UK’s largest charities included more than £225 million of so-called support and governance costs in £3.9 billion of ‘charitable spending’ in their most recent accounts.

In the most extreme cases, two charities, Marie Stopes International and Save the Children International, report figures suggesting 100 per cent of their expenditure goes on ‘charitable activities’ – even though both pay their chief executives over £200,000 a year. The findings have led to calls for a shake-up of charity sector accounting rules.

Under current guidelines, charities must publish data on the website of the Charity Commission showing how much of their income is spent on ‘charitable activities’. Charities say they are abiding by the rules, which permit support and governance costs to be included in the figure. Such costs – which are partially broken down in the charities’ annual reports, but not on the commission’s website – include IT, financial management, human resources, public relations, staffing, executive pay and governance.

In some cases, these costs are solely attributed to the ‘charitable activities’ section of their accounts. In others, the costs are divided across expenditure categories, such as ‘fundraising’.

The commission says good support and governance are a crucial aspect of ‘delivering on charitable objectives’ and so can legitimately be included in that category.

But critics argue that such costs should not be counted within ‘charitable spending’ and only serve to confuse donors who wish to see as much of their bequest as possible go directly to good causes. Gina Miller, a City investor and corporate governance expert who campaigns for transparency and tighter support costs in charities, last night called for an overhaul of accounting and regulation in the sector.

Claims: Some charities state that 100 per cent of donations go on frontline ‘charitable activities'

Claims: Some charities state that 100 per cent of donations go on frontline ‘charitable activities'

Claims: Some charities state that 100 per cent of donations go on frontline ‘charitable activities’

Miller, who is best known for a high-profile legal challenge to Brexit and for pushing through big rule changes in fund management, said: ‘Well-run charities, like any organisation, need to spend money on running their operations in an effective and efficient manner. But I believe it is misleading to donors to roll up all these costs. It is clearly absurd that charities are allowed to hide large elements of their costs within their disclosed charitable spending number.

‘If a charity receives £100 and after overheads £50 is available for spending on the genuine end charitable activities, donors should be told this rather than misled.’

Lord Wallace of Saltaire, a former Liberal Democrat Minister who worked on charity laws, said: ‘It would be far better to separate out support costs and staff costs from charitable activities. Then you get a sense of what proportion of their income is needed to cover support costs. If it’s only 5 per cent, they’re doing incredibly well. If it’s 10 per cent, that’s probably normal. If it’s up towards 40 or 50 per cent, there is something definitely wrong.’

He added: ‘There are a few charities that manage to spend far too much on administration. The Charity Commission’s staff is far too small to check these accounts, and they don’t usually intervene until someone questions them.’

The Mail on Sunday investigated the accounts of Britain’s ten largest mainstream charities by income – Save the Children International, Save the Children’s UK arm, Cancer Research UK, the National Trust, Oxfam, the British Heart Foundation, Sightsavers, Barnardo’s, Marie Stopes International and the British Red Cross.

Of the ten, the National Trust recorded the highest ‘support service’ cost. Some £61.9 million of such expenses were included in charitable spending of £533.7 million. This includes expenditure on governance, human resources, legal activity, IT, administration and finance.

A spokesman said: ‘Every year we spend millions of pounds protecting nature and historic places. We simply wouldn’t be able to do this without our support systems that allow staff and volunteers to do their jobs, as well as ensuring visitors have the best experience.’

Save the Children International claims, via its Charity Commission page, that 100 per cent of expenditure goes to charitable activities. But its accounts show its $1.3 billion (£1 billion) of charitable spending includes $36.8 million ‘support costs’, which in turn includes $6.2 million associated with ‘leadership and strategic investment’.

Its chief executive, Helle Thorning-Schmidt, a former Danish Prime Minister, was paid $299,136 last year, while 18 members of staff were paid $195,000 a year or more.

Save the Children Fund, the charity’s UK arm, logged £42.9 million of costs in its £370.5 million of charitable activities spending, breaking this down into £18.5 million spent on management and administration and £24.4 million on support.

Marie Stopes International, a birth control charity, also claims that 100 per cent of its £299.4 million-a-year expenditure was charitable. But this includes £13.2 million of support costs. The charity’s highest paid employee – thought to be chief executive Simon Cooke – took home £300,532 last year, and 15 employees were paid £150,000 or more. A charity spokesman said: ‘We are committed to transparency, which is why we also publish a clear and detailed breakdown of our income and expenditure in our annual report, free to view at the Charity Commission website and our own.’

A spokesman for the National Council for Voluntary Organisations defended charities’ figures, saying that they are merely following the commission’s rules.

He said a breakdown of ‘charitable activity’ costs is in the organisations’ annual reports, adding: ‘Charities spend prudently on things like IT or office costs, but can’t do their work without them. They follow approved accounting standards, and provide full details of their support costs in their publicly available annual reports.’

The commission said the accounting framework was changed in 2014 to ‘create a single figure for charitable activities that included governance and related support costs’. She added: ‘This reflects the fact that good governance is essential for a charity to operate effectively.

‘Our annual return in 2018 requires more information than ever before, including chief executive pay. We will be reviewing in the coming year what information charities should submit and how this can best be displayed.’


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