Sunday, September 23, 2012

Do Organisations Find There Are Too Many Charities Chasing Too Few Funds?

In the UK the Charity Commission website will tell you that there are 180,000 registered charities in England and Wales. In addition, there are countless thousands of small charities below the income threshold of £5,000 per year that are not required to register.

They will also tell you that most charities are small, although the larger charities tend to receive the bulk of income, where;

1)  Over four fifths (84%) of registered charities have an income of £10,000 or less;

2)  These charities have less than 5% of the income recorded;

3)  Around 6% of charities receive almost 90% of the total annual income recorded. The largest 500 charities (0.3% of those on the register) attract almost 50% of the total income.

Following the announcement of a real terms funding cut of 33% by 2014/15 in the UK, the Charity Commission is conducting a public consultation on its future role and focus. It is seeking to review its key priorities and develop a new strategy, which can be delivered within the resources available.

With this in mind Alison Benjamin reported in the Guardian that, “it is no wonder 70% of the public think there are too many charities doing similar work and competing with each other” and “Gordon McVie, director general of Cancer Research Campaign (CRC), the second largest cancer charity, openly acknowledges that the public is confused by the sheer number of charities. He warns: "Out of confusion mistrust is bred, and the charity sector only functions because of trust." Numerous small cancer research charities, he claims, end up granting funds to scientists whose requests for funding have been turned down by the CRC. "Something has to be done," he says.”

If you think that 180,000 charities in the UK is a lot, in the US the number of charities and foundations registered  with the IRS is in excess of 1.2 million, where similar to the UK the biggest 100 charities raise by far the largest amount of funding. In 2011 some of the top domestic charities/foundations in the US included the American National Red Cross with $3,588 million revenue; the Salvation Army (USA) with $1,807 million revenue; and Feeding America with $1,185 million revenue - of which their donor dependency is 67%, 72% and 100% respectively (as published by Forbes magazine).

So, can anything be done to help individuals and organisations focusing on corporate social responsibility make sense of this crowded market?

Another concern that Alison Benjamin highlighted is how “the public rightly believes that charities are spending too much of their charitable funds trying to get them to part with their money. A study of leading cancer charities by Manchester Business School found that, in 1997, just 65% of money raised was spent on the cause, compared to 90% in 1992. Across all charities, the average was 67% spent on charitable causes in 1997, compared to 80% five years earlier.”

Yet there is an argument against merging charities in similar sectors since, for example, Ed Mayo, director of the New Economics Foundation think-tank, insists that not enough voices are heard in a sector dominated by the largest charities.

A further problem is that Corporate Boards often make their ‘corporate socially responsible’ decisions and commitment’s  based on their own personal preferences which might not be in line with the priorities of actual charitable needs in the community. This of course could be partly due to the actual number of causes to choose from and keeping it ‘personal’ makes the decision process so much easier.

So what is your personal experience and how does your organisation make effective corporate socially responsible decisions?


Alison Benjamin (2000). Too Many Charities? The Guardian. 8th November.

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