Last week we talked about how finance works in the charity sector at a learning session with our business members; since I was probably the least numerate person in the room, I thought it would be a good idea for me to reflect on what was discussed.
Charles Scott, Managing Director at Action for Children and a Pilotlighter, covered the differences between the corporate and charitable worlds: where money comes from, regulations, surplus and deficit versus profit and loss, and so forth. But one thing he mentioned stuck with me: the biggest difference is cultural.
I think one of the reasons for this is that we are not supposed to talk about money in the charity sector, and that is exactly why the general public doesn’t always understand how it works. For instance, there is a fine line between what’s ‘acceptable’ and what’s not: as a sector we are discouraged from having surpluses and yet ‘there is clearly something wrong’ if we have a deficit.
We desperately need to get rid of the Victorian definition of charity in the minds of the public – and some within the sector. In the 21st century charities are professional and relevant parts of society and should be treated as such. The fact that we exist to make a positive difference in the world and not to make money should never be a reason to doubt the seriousness of the organisations.
We complain about the amount of pressure the sector is under, but what do we do to fix it? What do we do to educate the public so that they know how we operate? Once we embrace the topic of money and stop saying what we think the public wants to hear – “100% of your donation will go to the donkeys” – we will be ready to have the grown-up conversation.
No, 100% of your donation does not go to the donkey: the charity needs to run efficiently and effectively to help more donkeys today and in the future. For that it needs to pay its staff, it needs appropriate systems in place, it needs to create a strong brand people will recognise and donate to so it can do more good in future. That’s where your donation goes.
I am not saying everything is perfect and the sector runs hiccup-free. There have been cases when charities have put money before their beneficiaries, such as the Age UK / E.ON partnership scandal from earlier this year. In cases like this, when things go wrong it tends to be because those involved took their eyes off the ball – forgetting that we’re here for our beneficiaries and need to put them above all. Being realistic and honest about things like finance, having the difficult conversations and influencing public perceptions will allow us to better serve our communities.