Are charities losing our trust and donations?
In times of conflict and uncertainty, many of us feel compelled to show our support by making donations to those who need it most, at home and abroad.
Whilst there are countless charities to choose from in the UK, the elephant in the room is the growing distrust the British public has towards the sector.
New research from Milkywire, the app-based donation platform, found that one in ten Britons cited a lack of trust as a key reason for not donating, meanwhile 16 per cent believed that their donations didn’t reach those who needed them.
The impetus for this distrust can be linked to the scandals that have plagued well-known organisations in recent years, including 2018’s sexual abuse accusations involving Save the Children and Oxfam, as well as the supposed mismanagement of the Kids Company.
In the past month, the UK charity regulator announced it would be investigating the accounts of the foundation set up on behalf of lockdown sweetheart Sir Captain Tom Moore.
The Charity Commission found that it dished out grants of £160,000 to four charities whilst paying out more than £162,000 in management costs in its first year alone. It is also under fire for reportedly trying to appoint Moore’s daughter as CEO on a six-figure salary.
Whilst some may be shocked by the revelations, Alice Enders, Director of Research at Enders Analysis, told City A.M that the scandals are just part and parcel of a much wider issue.
As it stands in the UK, anyone can register a charity if its income is at least £5,000, meaning there are thousands of organisations across the country that can also benefit from the financial incentives that being a charity allows.
Not only do charities avoid paying corporation tax, but they also incur a much lower tax burden, as well as greater opportunities to free up capital to be distributed to directors in dividends.
“The reality is that it is beneficial for people to set up a charity with top heavy management structures, even if by doing so is not directly helping to address the problem it is trying to solve in society”, she said.
Milkywire data echoed this concern, with 14 per cent of the public stating that their lack of trust in charities was rooted in the notion that donations would be spent on staff salaries, rather than helping beneficiaries.
A key part of the Charity Commission’s role as regulator is to hold charities to account and deal with wrongdoing and harm.
However, Enders said that its role is fairly limited: “The Charity Commission is more reactive than it is proactive. The Commission isn’t investigating issues, but waits for them to be flagged when there is a specific complaint.”
A Charity Commission spokesperson pushed back against this claim and told City PM: “We are becoming an ever more proactive regulator, using our data to identify risks facing charities or groups of charities, so that we can address issues before they become serious problems, either for individual charities or public trust in charities.”
They also suggested that its own independent research actually showed an increase in public trust in recent years.
Looking forward, Nina Siemiatkowski, CEO of Milkywire, suggested a greater push for transparency was needed, where the public can see the direct impact of the money they are donating, as well as the payments made to directors.
“The UK charity sector is not broken, but there is work to be done to ensure they are as impactful as possible”, Siemiatkowski told City PM
So whilst it is impossible to remove all the problems that charities attract, the sector is reaching a point where it needs to rethink the motivations that sit behind charity formation, and put public confidence at its heart.