Why we've lost faith in charities

The Oxfam scandal is just the latest in a long-line of controversies to dog the third sector.

by Oliver Bennett
Last Updated: 20 Aug 2020

The hubbub in the north London offices of fundraising agency Listen is soothing, like the sound of breaking waves. Beneath industrial-style lights and inspirational posters - 'Start with a friendly hello' - a multitude of voices make calls on behalf of various charities, including Phil Waldon, who is working on the Friends of the Earth account. Phil's halfway through a three-and-a-half hour shift, in which he aspires to sign at least three people up to a donation. 'We don't get people to give - we allow them to.' And he's off, headsetting away to a woman in Wales, who's sweet but unconvinced. Phil clicks a button: 'Soft no.' What's a 'hard no'? 'Swearing. Slamming the phone down.'

It's another working day, but as Listen's managing director Tony Charalambides says, 'We all know charities are having a hard time.' For there has been a series of third-sector whammies. There's been the crash and burn of Kids Company, and other charity busts: BeatBullying and the British Association for Adoption and Fostering. Chuggers - 'charity muggers' - have had their activities curtailed by over 100 local authorities. Charity heads have been hauled over the coals for large salaries. A YouGov/Oxfam survey warned that Band Aid stereotypes of Africa are seen as 'depressing, manipulative and hopeless'. Even the charity shops which have been popping up all over the country's high streets are becoming less popular.

Credit: Martin Rowson

Listen was itself monstered by the Mail on Sunday when undercover reporters suggested that 'callous methods' were being used to extract donations from the elderly. Charalambides is now repairing lost trust with transparency, hence his allowing me to visit.

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Then last summer saw a rising drumbeat of bad news: the death of 92-year-old poppy-seller Olive Cooke, indelibly ascribed to aggressive cold calling; direct debit 'donations' taken from Alzheimer's sufferer Joseph Frost in Bedfordshire, and charities repeatedly selling the personal details of Samuel Rae in Cornwall, who has dementia. Questions were raised in Parliament about the 'gross exploitation' of vulnerable people, and 52,389 fundraising complaints were reported last year, up 3,957 on 2013.

Ominous 'big data' issues also lurk. Some charities have access to the police national computer - including the RSPCA and RSPB. As a seasoned observer of the charity sector puts it, 'The last two years have seen a sea-change. The golden years are over.'

It's a terrible pass for a sector that needs above all others to be ethical, and the soul-searching has begun. Sir Stuart Etherington of the National Council for Voluntary Organisations (NCVO) has just delivered a critical fundraising review. The Information Commissioner's Office (ICO) is investigating charities' use of data. The Public Accounts Committee has hauled charity heads in to explain these fundraising matters. Beneath all those colourful wristbands, 'JustGiving' calls on Facebook and TV text appeals, the third sector is in a pickle.

Complainants are massing - among them David Craig, author of 2014's The Great Charity Scandal. Craig is a management consultant who runs pull-no-punches website snoutsinthetrough.com and considers the sector bloated, overblown and in need of reform. 'We have over 195,000 registered charities UK wide, 27,000 of which are dependent on taxpayer's money,' he says, adding that in his view, the third sector is unaccountable, inefficient, unscrutinised, and simply too big. 'Charities employ over one million people,' says Craig. 'That's one in 30 employees.' He advocates urgent pruning by way of acquisitions and mergers ('There's massive duplication: 1,933 charities for children alone') and stopping those that are really businesses from hiding beneath the charity banner, including multifarious foundations as well as the Consumers' Association (the charitable arm of the publishers of Which? magazine) and the Nuffield Health private hospitals group.

The Institute of Economic Affairs (IEA) think tank agrees. 'Our main issue is the state funding that charities receive,' says the IEA's Chris Snowdon, author of The Sock Doctrine. 'Charities have become "sockpuppets", taking money from the government to lobby the government.' He's talking about things like Save the Children's lobbying against child poverty and the RSPB's work against fracking: campaigns that led to last year's Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Act, and to the then Minister for Civil Society Brooks Newmark agreeing that charities should 'stick to their knitting'.

Perhaps these attacks are political, the right-wing press knocking 'do-gooders'. But as George Orwell famously noted, 'Some things are true even though the Daily Telegraph says they are true,' and within the sector, complaints are taken seriously. 'Some think it's a plot, but they need to understand,' says Howard Lake, a consultant in the sector and publisher of UK Fundraising. 'It's dominating discussions. Five years ago we coasted. Now the gloves are off.'

And the big charities are pleased that the air is being given a chance to clear. 'I really think it will make a difference,' says Mike Adamson, chief executive of the British Red Cross - which has 3,900 staff and 24,000 volunteers handling about £260m worth of spending each year - who was consulted on the review. 'The regulation was ineffective. We needed to change.' The Etherington review (whose recommendations have been accepted in full by the government) says that the Fundraising Standards Board (FRSB) should be replaced with a new industry regulator to be funded by about 2,000 of the top charities and with strong links with the Charity Commission, to prioritise the public interest. And like the Telephone Preference Service, the public could opt-out of fundraising calls, and participating charities would carry a Kitemark.

Adamson is echoed by Mark Goldring, Oxfam GB's chief executive: 'It's a sensible way forward, which has the potential to bolster public trust in fundraising, set out clear rules about what is and isn't acceptable, and give the public confidence.'

So the stables are being swept. 'There's an urgent need for renewal,' says Joe Saxton of consultancy nfpSynergy, which recently published research finding that those people who trusted charities 'quite a lot' had fallen 16 points to 53% since 2014 - the worst since 2007. The downturn caused charities to fight for share, intensifying fundraising, chasing targets and needling donors. 'They're asking more people to give more often, and frankly it winds people up,' says Saxton. 'Charities are shocked. They thought they had automatic support. My worry is that trust will diminish and charities won't appear to matter.'

To help analyse these problems, the third-sector communications group CharityComms started a working party last year called Understanding Charities. 'It escalated this summer,' says CharityComms director Vicky Browning.

'Partly it's the legacy of the financial crisis but it's also a societal shift. Institutions are being questioned.' The church, politicians, journalism have all suffered hostile scrutiny, 'and now it's the turn of charities'. As Adamson says, 'The age of deference is over. We had high levels of trust and although they're still high, it is declining.' In a crowded public space, full of competing voices, it all became too heated. Still, the sector has been slow to react. In a chastening mea culpa, the outgoing chair of the FRSB, Colin Lloyd said, '... learning from public feedback has never been more evident.'

Lake says that the hostile stories mainly break down into pay, campaigning and fundraising, with data protection at the heart of the problem. 'There's a real sense that we have to balance it all,' says Joe Jenkins, director of engagement at Friends of the Earth, which recently sent a letter to donors entitled 'Are we getting it right?' inviting feedback. 'We took a proactive approach,' says Jenkins. 'The vast majority of respondents were positive and grateful that we asked.' Some attacks are politically motivated, he says, but FoE recognised the need to face 'sectoral challenges'.

And things are changing. The Lobbying Act has already had what Jenkins calls a 'chilling effect', and as nfpSynergy's Saxton puts it: 'Fundraising isn't seen as warm and cosy any more. People are furious that they have to say "no" three times and don't like that 70% of door knockers are charity fundraisers.'

Moreover, demographics are bringing change. 'There's been a particular issue with the older, 65-85 generation who find it difficult to say "no", but the new generation will say "no".' They have a consumer attitude, don't like direct debit and won't necessarily stick with a charity all their lives.

A problem when talking about the 'charity sector' is that it's diverse and complex. There are 10,000 medium to large charities making money, but also a 'long tail' of small charities. The top 2,500 charities get 80% of the money, in what some see as a 'Tesco-isation' of the sector - the likes of Barnardo's, Save the Children, Oxfam being winners: the latter has just recorded its biggest income ever at £401m, £12m up on last year. Yet small and medium-sized charities have lost out, as givers rush to 'brand names' in an anxious market.

Against this background, showing 'public benefit' - the key requirement of the governing Charity Commission - becomes more difficult, and charities get stuck in a double-bind: criticised for both overt professionalism and for success. 'Charities can't win,' says Saxton. 'They're expected to be amateurish and professional at the same time.'

Take a recent newspaper story, which lambasted the Alzheimer's Society for spending a large percentage of its income on fundraising. 'It's like saying, "Have you seen how much the Samaritans spend on their phone bill?"' quips Browning. As to lobbying, she says: well, charities have always lobbied. 'The RSPCA was set up by William Wilberforce two centuries ago to change the world, so to say it shouldn't lobby about the badger cull is odd.'

Credit: Martin Rowson

And as the relationship between the public and the sector hardens, it does seem as if charities can do no right. The unfortunate Olive Cooke's family confirmed that she didn't commit suicide because of rogue fundraising calls. And Kids Company, whose larger-than-life founder Camila Batmanghelidjh was grilled by MPs recently over potential misuse of public funds, was always an anomaly, lurching from famine to feast. 'It's actually a cautious sector, and charities have an average of over five months' reserve cash,' says Browning.

Despite their Good Thing credentials, charities often don't trust the media, appearing defensive perhaps because of fears over becoming lightning rods. (Neither several specific charities, nor the Charity Commission itself, wished to comment for this article.) 'Very few people stand up for the charity sector beyond standard rebuttals, and that's not good,' says Lake. Part of the consternation is the shifting position of charity in society - a deep-rooted and polarised dialogue between self-reliance and assistance. This was revived by the Conservatives' 'Big Society' campaign and criticised by those such as Australian critic Dr Neil Levy, author of the article Against Philanthropy: Individual and Corporate, who argues that charities shouldn't do the work of the state - for example, the NSPCC uses income from local authority child protection services. 'This has led people to pick up the idea that charities are quangos abusing public money,' says Kathy Evans, head of kids' charity support provider Children England.

The Labour MP John Spellar, who has a particular interest in charities, thinks there's been too much emphasis on corporate practice. 'They've (charities) been looking at the private sector with envy,' he says. 'It's caused this debilitating mindset.'

Some even argue that tax incentives worsen inequality by reducing the Treasury take. The contrarian Craig calculates that the cost of the sector to the taxpayer is a minimum of £6.5bn - as charities avoid tax on profits by way of VAT relief, stamp duty relief, inheritance tax relief, payroll giving, Gift Aid. He believes the sector should sub-divide and classify: for example, 'care charities', 'educational charities', 'campaigning charities', while the IEA argues that state-funded charities should re-tender each year and be open (currently they are exempt) to freedom-of-information requests.

Meanwhile, says Browning, charities should fight their corner and emphasise their benefits and outcomes. 'They shouldn't retreat into virtuous isolation. If it's measurable - how many lives they save, how many dogs they spay - then tell us,' she says. 'When you walk along a canal towpath, that's been made by a charity - even the litter bin from Keep Britain Tidy.'

They should also remind people, she adds, that pay in the third sector is typically 40% lower than in private companies: the median chief executive salary is £60,000. '£125,000 a year for the director of Oxfam is a bargain for a global "brand" name, with huge turnover and complicated tasks,' agrees Saxton.

Charities are on the case, he reckons. 'There's a hunger to do something now and charities are innovating.' For example, Joe Jenkins at FoE recommends 'value exchange' fundraising, such as a current campaign using packs of wildflower seeds. Social media and the internet are waxing, house-to-house and street collections are waning, and in this shift, transparency and proper data management and accountability will be key.

As John Burton, the director of Suffolk-based charity the World Land Trust, says: 'We don't stop at FAQs. We put up our full accounts. We answer any questions put to us, allow donors to track their money - and this year we've increased our supporter base.' Burton would never use off-topic celebrities and cautions against 'mission drift'. 'The RSPB is concerned with squirrels. Squirrels are not birds.' And don't pressure people via sub-contracted agencies that may have their own target-pressures within.

Above all, says Mike Adamson of the British Red Cross: 'Be credible and robust.' Relationships with donors should be longer term and deeper, and the younger generation - 'whose attentions spans are shorter than older people'- need to be mobilised.

Fundraisers need to recognise that these so-called millennials experience compassion 'in the moment', and that they need to think of creative ways to stimulate funding: Adamson thought the Ice Bucket Challenge (for ALS/MND charities) tremendously successful. 'Also, they need to know that we've been here for 150 years. We need to tell our story.'

But to think that the third sector's problems can be solved simply by becoming more like orthodox businesses is misleading, says Kathy Evans. 'It's an opportunity for charities to refresh rather than rebrand,' she says. 'A donation is not a sales stream. Charities are a different space.' Once an anthropologist, Evans believes that we should all have a revived understanding of the deep power of the gift - a particular bond in society as well as a human instinct. By reviving this 'gift economy' we might just repair the third sector's virtuous circle.

This article was originally published in October 2015

Images: Martin Rowson


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