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7th March 2018
Spend money, make money – why it’s no bad thing for charities by Avital Mendelsohn

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Spend money, make money – why it’s no bad thing for charities by Avital Mendelsohn

Charity overheads are a complex matter. With the reputation of the sector under pressure once again, questions around the funding and management of charities are being asked with ever greater frequency. Particular suspicion is directed at how charities spend their money and, from speaking to people who work for or support charities, there is concern over how much of people’s donations go on frontline services.

How should charities respond? Donors demand ‘transparency’ so that they know how their pound will be spent. These will often show that a small but significant proportion of charitable expenditure goes towards the salaries of the charities’ employees and other costs associated with fundraising, advocacy and administration.

The charity sector shouldn’t be embarrassed about showing this. Instead, charities need to make the case that, while they spend as prudently as possible, they are professional organisations that need to spend money on the things that ensure that they are being effective (such as professional services including accounting and legal advice) and can help the greatest number of people (for example, by investing in fundraising).

The adage goes that to make money, one has to spend money. It’s not enough for a charity to raise a large figure through a fundraising event and then leave it sitting in a bank. The money needs to be invested and a strategy devised so that the charity can grow, in the same way as a business, and it’s only creative and ambitious individuals who can achieve this. So why then does the expectation exist that employees of a charity will be low-paid, if they possess a strong skill set? Charities want to attract talent, but if that same candidate could be employed in a similar position at a profitable company, then they will choose that option and the charity – and its beneficiaries – will in the long run be worse off.

Ultimately, a utopian picture of a charity sector run entirely by well-meaning amateurs might have some sentimental appeal – but it is not in the interests of the people who most urgently need their help. This is the argument the sector should be making. It must not shrink from it.

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