Comic Relief scandal: There are red faces behind the red noses

The charity is under fire after a ‘Panorama’ exposé, but the laws governing investments are complex

Share
Related Topics

Comic Relief is doing something funny with your money. Or should I say our money, since I, too, invariably pick up the phone after one of the heart-tugging films in which Red Nose Day specialises and which this year raised £100m for good causes. So the revelation by Panorama on BBC1 last week – the same channel which screens those fund-raising films – that the charity has some cash invested in companies which manufacture cigarettes, alcohol and armaments was a bit of a shocker.

This being the panto season, much of the subsequent hoo-ha has involved booing and cheering at stereotypes. Panorama sprayed the charge of hypocrisy at other charities, too, with a range of accusations – some of which seemed woefully ignorant to anyone who knows anything about international development. At the other end of the scale, Russell Brand chipped in at the end of the week, tweeting: “Comic Relief is run by beautiful, devoted people. If you want to look for corrupt arseholes there’s a lot of better options.”

This was all good knockabout stuff. But the panto journalism, and the withering comments from those who limit their intellectual analysis to 140 characters, failed to explain why Comic Relief got itself into this pickle – and what should be done to extricate it.

A couple of scenarios will illuminate that. Suppose Panorama had run the opposite kind of claim – that, say, Comic Relief had incompetently lost £20m over the past 10 years because of poor investments. Or suppose the scandal was that the charity had dished out all its money in a hurry and that significant amounts of the cash had been wasted or trousered by corrupt recipients.

The latter could have come about had the charity had different policies in place to allocate the money it raises. At present, teams of specialists, advised by outside experts, distribute the cash in a controlled way that allows two years, until the next Red Nose Day, to allocate it all.

Some good causes are allocated money to spend over a five-year period. Grants are given in instalments. The cash could stay in the bank, earning a measly 0.5 per cent interest, but Comic Relief invests it. The money that makes is used to pay the charity’s running costs, so that every penny the public gives goes to good causes with none spent on admin.

Comic Relief is a massive organisation. It has raised £900m since it began. Currently, it has just under £240m invested, but this is not, as critics have fatuously suggested, “hoarded”: £125m is set aside for long-term projects; £90m will be allocated before the next Red Nose Day in 2015. That leaves £25m (10.41 per cent) to run the charity.

But the independent managers of the blue-chip funds in which the money is held have put together a diversified portfolio which includes £630,000 in the arms company BAE Systems. This is just 0.26 per cent of the total but, even so, it is embarrassing for a charity that, in the same year, spent £5.5m helping “people affected by conflict”. It has small holdings in drinks companies, too – though many aid experts find alcohol far less problematic.

Its investment in tobacco companies, however, is deeply controversial. It has £2.7m invested in an industry that heavily promotes cigarettes in the developing world. Comic Relief supports a charity called Target Tuberculosis, which calculates that smoking may be responsible for more than 20 per cent of TB cases worldwide. Hence the red faces behind the red noses.

The law allows charities to use ethical investments, Sam Younger, the Charity Commission chief executive, said on Panorama – but it also demands that charities invest for the best financial return. However, the programme did not reveal that immediately after the interview, Younger wrote to the BBC, saying: “Judging from some of the questions asked … I think there’s possibly a slight confusion as to what charity law says about investments.”

That’s not surprising because charity law says contradictory things. It acknowledges charities might lose public support if they invest in what will bring maximum returns. But, Younger said, it is easy for a single-issue charity to exclude undesirable investments. It is much harder for a charity with a wide range of projects.

“The wider a charity’s objects, the more difficult it is to justify an ethical investment,” he wrote. “A charity with broad or general objects is in a different position, given trustees’ duties to invest for the best return (relative to risk).”

That is not all. The evidence on ethical investments is mixed. Sometimes they perform as well, or better, than the wider market; other times not. More evidence is needed and Comic Relief should make public its exploration of the issue. It has done some work on this in the past. In 1999, it shifted some of its money into ethical funds but they underperformed. Its trustees felt charity law required them to shift back into more conventional funds. Comic Relief clearly understands the problem, but a solution has not been found.

The Charity Commissioners need to clarify the law, and offer some calculus to help a charity to decide how to balance the risks of a loss of cash against loss of reputation. If they cannot issue more robust guidance, then it may be that the law has to change to allow charities to drop high-profit but incompatible investments without worrying that they are breaking the law if they earn less.

Panto journalists would still find a way to boo and jeer. But the public would be happy that when they are exhorted to do something funny for money, the funny business ended there.

Paul Vallely is visiting professor in public ethics at the University of Chester

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Sustainability Manager

Competitive: The Green Recruitment Company: Job Title: Scheme Manager (BREEAM)...

Graduate Sustainability Professional

Flexible, depending on experience: The Green Recruitment Company: Job Title: T...

Programme Director - Conduct Risk - London

£850 - £950 per day: Orgtel: Programme Director - Conduct Risk - Banking - £85...

Project Coordinator/Order Entry, SC Clear

£100 - £110 per day: Orgtel: Project Coordinator/Order Entry Hampshire

Day In a Page

Read Next
The Big Society Network was assessed as  

A failed charity, three grants and Tory connections... What became of Cameron's Big Society Network?

Oliver Wright
80 per cent of Commonwealth countries discriminate against LGBTI people - will Salmond speak out?  

Alex Salmond must speak out against the Commonwealth's homophobic countries

Peter Tatchell
Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn
Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Meet the man who doesn't want to go down in history as the country's last Scottish Secretary
Legoland Windsor's master model-makers reveal the tricks of their trade (including how to stop the kids wrecking your Eiffel Tower)

Meet the people who play with Lego for a living

They are the master builders: Lego's crack team of model-makers, who have just glued down the last of 650,000 bricks as they recreate Paris in Windsor. Susie Mesure goes behind the scenes
The 20 best days out for the summer holidays: From Spitfires to summer ferry sailings

20 best days out for the summer holidays

From summer ferry sailings in Tyne and Wear and adventure days at Bear Grylls Survival Academy to Spitfires at the Imperial War Museum Duxford and bog-snorkelling at the World Alternative Games...
Open-air theatres: If all the world is a stage, then everyone gets in on the act

All the wood’s a stage

Open-air productions are the cue for better box-office receipts, new audiences, more interesting artistic challenges – and a picnic
Rand Paul is a Republican with an eye on the world

Rupert Cornwell: A Republican with an eye on the world

Rand Paul is laying out his presidential stall by taking on his party's disastrous record on foreign policy
Self-preservation society: Pickles are moving from the side of your plate to become the star dish

Self-preservation society

Pickles are moving from the side of your plate to become the star dish
Generation gap opens a career sinkhole

Britons live ever longer, but still society persists in glorifying youth

We are living longer but considered 'past it' younger, the reshuffle suggests. There may be trouble ahead, says DJ Taylor