Why charities aren't bagging a fortune from your donations
Kate Hughes reveals the worrying truth about the erosion of giving to good causes
Friday 09 August 2013
The news that several charity leaders are on huge salaries is the latest in a series of PR challenges that the sector has had to face down. The latest revelations that executives across some of the UK's largest and most highly regarded charitable organisations are pulling in salaries of up to £184,000 from the precious coffers of the British Red Cross, Save the Children, Christian Aid and others. Once again, the actions of a few are jeopardising the incredible work of many.
For years now, charities up and down the country have been battling not only the effects of economic downturn, but also theft, organised crime, fraud worries and accusations of pure mismanagement. And now we find out that when much of the working population – more than half of which gives to charity every month – has been suffering redundancy, pay freezes, pay cuts and a rise in zero-hours contracts, the number of charity staff earning more than £100,000 annually has risen from 19 to 30 since 2010. Even William Shawcross , the chairman of the Charity Commission, who is reportedly on £50,000 for two days a week himself, has warned that a balance must be struck between robust management and low costs.
The critical point, though, is that charitable giving is, and must remain, a vital part of our society. Around 55 per cent of us – the equivalent of 28.4 million adults – donate to charitable causes in a typical month, according to figures from the UK Giving 2012 report produced by the National Council for Voluntary Organisations (NCVO) and the Charities Aid Foundation (CAF).
Each of those adults typically gave £10 a month in 2011-12, down from £11 in 2010-11 and £12 in 2009-10. It's a grand total of £9.3bn but is down by £1.7bn in cash terms and £2.3bn in real terms (taking into account the effect of inflation) in a year. That makes it the smallest annual amount since the survey began in 2004.
So how can those of us whose salaries are perhaps a little more modest than some charity executives ensure the right people are doing the right things with our hard-earned cash? It's not just about making sure you tick the Gift Aid box.
Barely a day goes by when one charity bag or another doesn't come through the letterbox. From the comfort of your own home, you simply drop in the items – usually clothes that you no longer need – seal it up and leave it on the doorstop. Job done. But even this simple approach has challenges.
The value of textiles has increased dramatically in recent years, and the global annual value of second-hand clothes is now more than £620m. Consequently, charity bags are disappearing from doorsteps up and down the country, often as a result of organised gang activity.
The British Heart Foundation, which receives just under £20.8m in donated goods from house-to-house collections in England and Wales, estimates that such thefts are costing popular charities £15m a year in lost donations.
But even if they aren't stolen, the percentage of your donation reaching the charity of your choice from bag collections could still be tiny. The British Heart Foundation suggests that the proportion of profits from collections run by commercial companies could be as low as 5 per cent.
To avoid such erosion, or indeed disappearance, of your donation, either take your goods into the charity shop yourself or check on the bag that the collection is by the charity itself and not a third party working on their behalf.
Fraud and impersonation
Charity fraudsters come in two forms: those who make up a fictitious charity, often using a recent event such as tsunami or earthquake to tug at the heartstrings, and those who hijack genuine, often well-known charity identities to collect and keep your money. Clothing or household items are collected and sold on; fraudulent charity websites may take your credit or account details and use them to make purchases; and if you're asked to call a phone number to make a donation, not only could the fraudster pocket your donation, they could also gain from premium-rate numbers.
Like any unsolicited requests for cash, you could be the target of charity fraud if you receive emails asking for donations, you're approached in a public place or at your front door, or collection bags are left for you to fill.
The problem is, of course, that bona fide charity activity and fraudulent charity activity are often indistinguishable at first glance.
All charities with an income of £5,000 or more a year have to be registered with, and are regulated by, the Charity Commission – and all documentation, collection bags, envelopes and IDs have to carry their registration number. Check collection bags for a named charity, the correct contact details and even accurate spelling. If those criteria aren't met, the chances are they're fake. But even with these details, the fraudster could simply be copying details, so always double check with the charity directly using contact details from a separate source that you know to be correct. Anyone collecting money for a charity should have documents from that charity confirming their legitimacy, so always ask for these and check them in the same way.
If you think you've been duped, or to check the validity of a charity, contact the Charity Commission at www.charity-commission.gov.uk or call their helpline (0845 300 0218). You local authority or police station will also be able to tell you if a licence has been granted to collect in your area.
Bankruptcy and closure
Just a few weeks ago, the online giving website www.charitygiving.co.uk was suspended by the Charity Commission after concerns were raised that the online portal was failing to pass on at least £250,000 collected on behalf of a range of not-for-profit organisations.
The emergency manager appointed by the commission has now called on charities and donors to check for and "speak up about" any amounts outstanding, as the portal and The Dove Trust charity, which sits behind the site and manages the cash, had failed to file any financial accounts since 2009. Any donations made on or after 12 July should be automatically returned to the donor, but any concerns should be raised at Dove-TrustInterimManager@crowecw.co.uk or on 0207 842 7313.
But the closure of a charity doesn't have the same effect for donors as a closed commercial company does for consumers.
Just like any organisation, charities wind up all the time. Of the 160,000 registered charities in England and Wales, around 5,000 close their doors every year – roughly equal to the number that are created.
"They don't all just run out of cash," says Sarah Miller of the Charity Commission. "They could merge, complete their aim – like finishing the church roof – or just run out of steam or volunteers. A charity's board of trustees would need to decide to close, and winding up the charity itself could take a while, especially if there were complicated assets involved.
"They must inform us that they wish to come off the register and any assets left over have to be applied to the nearest similar charity.
"This isn't like a commercial consumer situation, though, and legally, once you have made a decision to donate, you don't have the automatic right to get it back," she adds.
"The assets have to be used for charitable purposes and the charity itself will either identify the next-best fit for those assets or we can advise them."
Commision woe: regulation in the real world
The Public Accounts Committee (PAC) recently raised concerns that up to 300 registered charities could be fronts for tax avoidance after one outfit, the Cup Trust, took in "donations" worth £176m after being awarded charity status by the Charity Commission in 2009. It only gave away £55,000 to charitable causes, according to a PAC report released last month.
At the same time, the trust also tried to claim gift aid of £46m that would otherwise have been paid in tax, the committee reported.
The man on the street is highly unlikely to be approached by such an outfit as they are set up simply to avoid tax, but the report criticised the Charity Commission for missing "clear 'red flags' that should have raised suspicions about the Trust's activities ... [It] should have undertaken more due diligence in deciding whether to register the Trust and should have liaised with HMRC."
The PAC and National Audit Office have repeatedly warned the Charity Commission to make greater use of its statutory powers. In fact, MPs are planning to launch a new inquiry into whether it is fit for purpose.
For more information about the regulation, and registering, of charities in England and Wales, go to charitycommission.gov.uk. For charities registered in Scotland, go to oscr.org.uk, or in Northern Ireland, charitycommissionni.org.uk
- 1 Crystal meth addict 'gouged out his eyes and ate them' while high on drug, Australian MP claims
- 2 As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
- 3 The ten most unequal developed countries in the world
- 4 Saudi Arabia 'seeking to head United Nations Human Rights Council'
- 5 Toddler throws a tantrum at the White House – in front of Barack Obama
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
Report finds that Britain's wages are the most unequal in Europe
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
The day that Britain resigned as a global power
Gay marriage 'Bert and Ernie' cake bakery found guilty of discrimination in Northern Ireland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...
Day In a Page
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof