The Charity Commission has issued a stark warning to a Derbyshire charity – the National Hereditary Breast Cancer Helpline – after it emerged that the organisation spent just 3 per cent (around £27,000) of its total expenditure on charitable activities in 2014-15. Over £800,000 – went on “fundraising and other expenses”.
The Commission said the organisation’s trustees had “committed a breach of trust”. But how common is this kind of practice? Is your money going where it should?
How much do charities spend on their charitable activities?
As of December 2016, there were 167,000 registered charities in England and Wales, with a collective annual income of over £70 billion.
Data from the UK Civil Society Almanac shows that in 2014-15, charities spent around £42 billion of their income.
Using that data, we’ve calculated that between 60 and 70 per cent of charities’ annual spending goes on “charitable activities” – i.e. providing the services or fulfilling the duties that the charity exists to provide.
Administration (often chalked up as “governance”) as well as spending on fundraising are the next largest costs. And these are at least in part designed to generate future income for the organisation.
Charity spending: size does matter
But that figure only gives us part of the picture. When we break it down by charity size, we can see that the very smallest and the very largest charities spend much less on their charitable objectives as a proportion of their total expenditure.
“Small and micro” charities – i.e. those with an annual income of under £100,000 – dedicated just 60 per cent of their spending to charitable activities in 2014-15.
At the other end of the spectrum, so-called “super-major” organisations – i.e. those with an annual income of £100 million or more – spent a similar proportion on charitable activities, at just under 64 per cent.
That said, the largest charities actually saw their incomes go up in recent years, while the smallest players have got even smaller. So it’s harder to explain why super-major organisation have been spending relatively little on their charitable activities.
Medium-sized operations performed best, with nearly three quarters of their money going towards charitable activities.
But with all of these statistics, it’s worth remembering that this is an average position. Any one charity may well spend much more or less on charitable activities. The Charity Commission website allows you to find out more about the spending of an individual organisation.
What about staff salaries?
The average boss of the UK’s top 100 charities is paid £255,000 a year, according to analysis by Third Sector. Fourteen of those charities paid their highest earners more than £300,000.
But a report by the National Council for Voluntary Organisations (NCVO) found that of all registered charities, 91 per cent have no paid staff at all and are run by volunteers. The remaining 9% provide jobs for 800,000 people. Fewer than 1% of charities employ a member of staff earning £60,000 or more.