Criticised charity to raise spending on administration

A CHARITABLE trust set up by the Princess Royal intends to increase its administration costs despite being severely criticised for spending almost pounds 1.5m on expenses in its first three years, with only pounds 263,000 going to charity.

Unpublished accounts of the Princess Royal Trust for Carers reveal that it plans to spend pounds 729,000 on administration in 1993-94, its fourth year. The organisation is currently forecasting a deficit of more than pounds 290,000 in this, its third year.

Many charity leaders are dismayed that the trust, which provides money for projects helping people who care for others, is spending so much on administration. They believe the group has wasted money which would normally have gone to them. They also believe the trust's fund-raising predictions for the next few years are wildly optimistic.

The trust argues that start-up costs are always high and that its strategy of spending large sums of money to attract big donations is starting to work.

Last week the Independent reported that in the trust's first two years it spent pounds 860,000 on administration - including pounds 33,718 on 'corporate identity' - and fund-raising, but not a penny on charity. This financial year - ending 31 March 1993 - it expects to spend pounds 612,000 on administration and pounds 263,000 on charity.

Administration costs for charities are usually between 5 and 20 per cent of the budget.

It is understood that the trust has recently discussed two forecasts for 1993-94, the first of which was considered the most realistic option. In this it predicts raising pounds 1.5m, of which it plans to spend pounds 729,000 on administration and pounds 767,000 on project grants, leaving a deficit of about pounds 300,000. In the best case scenario it would secure donations of pounds 2.5m, leaving a pounds 700,000 surplus.

Both these calculations would break the trust's pledge not to spend more than 15 per cent of its income on administration in 1993-94.

However, Dr Elizabeth Nelson, the chief executive, said she was confident the trust would keep to its pledge. For this to happen the trust would have to raise about pounds 5m in 1993-94 - a figure charity leaders and some trust members privately say is incredibly optimistic.

Nevertheless, Dr Nelson is confident it can raise enough money. She said: 'By the end of the next financial year we will have advanced fund-raising and spending. In view of what has happened recently we are speeding up the fund-raising. We are feeling very bullish about the future.'

Iain Vallance, chairman of the trust's committee of trustees and the chairman of British Telecom, is understood to be unhappy with the 1993-94 predictions and has asked the trustees to draw up some alternatives.

Mr Vallance refused to discuss details. In a statement he said: 'I have every confidence in the present management of the trust and their plans for the years ahead.' Dr Nelson said all the trustees were happy with the 1993- 94 accounts.

British Telecom gave pounds 250,000 to the trust in September. Mr Vallance has also donated pounds 240,000 of his BT bonuses.

The trust has pledged to provide at least pounds 2.2m in donations during the next four years for 30 projects for carers who help people such as the elderly and handicapped. This total will be matched by about pounds 4m from local authorities and government departments. Some members of the trust have described the accounts as making 'pretty sick reading'.

Charity leaders who were contacted were privately very critical of the trust, but were unwilling to speak out publicly in case they jeopardised future grants or alienated the Princess Royal.

A senior charity leader said: 'It's extraordinary that the trust still plans to spend so much on administration based on grand claims of future donations.

'They have been drawing off money that should go directly to charities that are in a desperate situation. The amounts they have raised are peanuts when you consider how much is being spent.'

Another charity chief said: 'It's very strange that BT should give pounds 250,000 to a charity that was in financial trouble - I can't imagine it doing that to many other groups.

'It appears having Iain Vallance as an executive is quite an advantage. And of course the more BT's charitable budget is used on the trust, the less there is for other groups.'