Judge charities like businesses, not on how little they spend
On November 19, 2013 - exactly a year ago today - we woke to reports about salary top-ups paid in some voluntary hospitals. The following day in this paper, John Downing wrote that the revelations were a kick in the teeth to volunteers.
The revelations continued to unfold. Fundraising Ireland has been unequivocal in its denunciation of poor governance practices and lack of transparency since the charity sector first came under siege last November. Transparency is vital. Donors must know exactly where their money is going and they must be able to trust that those running the charities they have chosen to support with their hard-earned cash are doing so rigorously, professionally and completely openly.
We also believe that every crisis has a silver lining. Valuable lessons have been learned over the past year by the charity sector, not least of which is that no donor, no donation, and no supporter can ever be taken for granted.
Possibly the best thing to emerge from the past year has been the new Charities Regulatory Authority. It is a pity, perhaps, that it took a crisis for the Government to fast-track its establishment.
The past year has also been an opportunity to ask some hard questions about the not-for-profit sector in modern Ireland - what we choose to understand of it and what we expect from it.
From the State's perspective, it makes sense to outsource many functions to not-for-profit organisations for reasons of efficiency, professionalism and cost. Mirroring this, not-for-profit organisations would often see that they are in the best position to deliver social programmes.
However, we have to ask if this complex relationship between the State and the not-for-profit sector is not a little unbalanced. The relationship is a catch 22, really. Not-for-profit organisations providing services on behalf of the State find themselves shouldering an ever-expanding responsibility for which they are usually under-funded, but inevitably over-subscribed. They must either fundraise or turn people away. The latter option is rarely palatable by people hardwired to help. And so, they are forced to fundraise as well as deliver full-time statutory-led obligations that the Government has failed to provide. Something has to give.
The second question - and this is perhaps the toughest question to find answers to - is why the public and media continue to judge charities almost exclusively on overhead costs and salaries? I am not suggesting charity spending should be anything but fully transparent, nor am I suggesting spending should be anything but effective, reasonable and appropriate. But do we need to explore why we continue to insist that charities remain in a kind of time warp by adhering to an almost puritanical view that not-for-profit organisations should be rewarded for how little they spend - not for what they get done. Everybody seems to want to see that no more than 10pc of an organisation's spend is used for administration, fundraising or governance, with the remaining 90pc, at least, going to programmes and activities.
There is strong evidence that shows administration costs tell you absolutely nothing about an organisation. If we want the non-profit sector to do without the successful tactics of the business sector - marketing and advertising, for example - how can we expect the non-profit sector to aspire to greatness for those reliant on it? Charities should be viewed, not as purely altruistic entities, but as businesses that deliver social dividend and social good. That is, after all, exactly what they do.
We ask if it might be time that charities in Ireland are, like all businesses, measured on quality of services they provide for sick children or people with disabilities, and dare say it, on the amount of profit they make. We have to allow charities to cast off the altruistic chains of their past so that they can function as outcome-driven, social dividend businesses that are measured on how much they get done, and not only on how little they spend.
Anne Hanniffy is CEO of Fundraising Ireland