When charities aren't charities

Nick Seddon
    Nick Seddon
Journalist and author of Who Cares?

Out to take over the charity world IT USED TO BE A TRUTH universally acknowledged that a charity in need of money turned to the public for support. But that is no longer the case.

Many charities depend on the state. Two thirds of the biggest charities that deliver services rely on government contracts for more than 80% of their income, and this includes some of the biggest and most famous brands – NCH (88%), Leonard Cheshire (88%) and Turning Point (96%).

Arms of government?
What difference does it make if a charity’s money is coming from the government?

For a start, in 88% of cases government contracts don’t cover the full costs of the projects they’re supposed to fund, so charities end up having to move money from other projects to subsidise the government’s work. Also worrying is the way that charities suffer from so-called mission creep. As they become more dependent on government money, that they begin to follow the government’s agenda. According to a recent Charity Commission survey, 75% of service-providing charities feel under pressure to conform to their funders’ wishes.
"It's time to clear things up. Why not re-classify the charitable sector?"
The risk is that as charities come to look more like the statutory departments on which they depend for money, they jeopardise the very attributes of the sector – innovation, diversity and so on – which made them attractive partners for government in the first place.

Levelling the playing-field
While no one doubts that major charities do good work, there’s a difference between a big brand with thousands of staff taking millions of taxpayers’ pounds and a small community-based charity dependent on volunteers and donations. They currently compete on the same playing field, both for contracts and the goodwill of the public, yet a recent survey has found that one in five people would be less likely to donate to a charity on the payroll of the government.

It’s time to clear things up. Why not reclassify the sector to help charities choose the kind of body they want to be – and help donors choose what they support?

We could have three categories:
  1. Charities receiving less than 30% of their income from the state would still benefit from full charitable status.
  2. Those receiving 30% to 70% would be called “state-funded charities” and receive more modest benefits.
  3. Those currently receiving over 70% of their income from the state would have to choose either to reduce their dependency on state funding or lose their charitable status.
Classification Example Charities
Independent charities (receiving less than 30 per cent of their income from the state)

National Trust

RNLI

The Salvation Army

State-funded charities (receiving between 30 and 70 per cent of their income from the state)

Save the Children

Oxfam

Shelter

Statutory agencies (receiving 70 per cent or more of their income from the state)

Turning Point

NCH

National Family and Parenting Institute


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Reader's comments

Submitted by mikemuses on Wed, 08/08/2007 - 5:27pm.

"necessary humanitarian services"

Charities will collect it because it is voluntary, and they'll make a passionate argument for it to convince people to assist. Some will come from low earners, some from high earners, some from businesses giving, much from gifts in wills.   If it was taxed, it would be forced paying, and people would simply vote for a different political party as soon as they have the chance.  Do it the other way, stop taxing me, and I'll give the difference where I think it's needed.

Society has a need for government and charity, as they provide different things, abolishing either couldn't work. The difficulty comes in where the lines are blurred. 


Submitted by Fifi Steinweg (not verified) on Wed, 08/08/2007 - 4:52pm.

Abolish charitable status. (Cut the charities free to do as they please but tax their incomes and make them as responsible for their advertising/fundraising claims as any other business). Get the State to properly fund all the necessary humanitarian services from tax payer's money.

If one says "Well, taxes would have to be raised so much... people don't have that money", the answer surely is "Well how were the charities going to collect it in the first place then?" - it's all a matter of how equitably the tax schedule is designed. Why should people with low incomes be guilted into making voluntary contributions to good causes when high earners have the intelligence not to?

First World Country my eye!


Submitted by serena25 on Sat, 09/06/2007 - 6:22pm.

The article could go further by discussing the issues relating to European and other more 'bureaucratic' forms of statutory funding and the effect this can have on the charity's effectiveness...


Submitted by mikemuses on Thu, 05/04/2007 - 11:02am.

The problem arises with things like health charities.  Local authorities have to provide care for people with certain conditions, but often charities end up being paid to provide the service.  If the charities didn't provide it though, then the 'care' provided by the government would in many cases be, frankly, unsuitable.  (Eg, a 30 year old with MS in an old people's home or mental institution).  The extra is that people get the care they need, rather than something called care.

While many charities gain a sizeable income from this, it is often less than the amount it costs them, so while it looks like they're getting lots of money from the government to do the government's work, they're actually subsidising the government.

I don't know the solution to this, but I do know that the individuals whose lives are affected deserve real care.


Submitted by cameronweaver on Tue, 03/04/2007 - 12:28pm.

I think this article raises a lot of excellent points - and deserves significantly more attention and than it initially got (when published in a different form) a few months ago.

Charities that do the government's work simply cannot call themselves 'charities' in any true sense. If the word is to have any meaning, charities must provide a service which is in addition to what the state provides. 

I repeat: charities do things that are charitable - that are funded through the goodwill of donors  - and the government provides services which are paid for through compulsory taxes. These are not compatible philosophies.

It's in both the government's and 'charities'' interest to keep quiet about this issue.  The charities concerned benefit handsomely from government income, and the government gets services provided at a favourable price.

This is simply unfair, and makes a mockery of what 'charity' actually means. 


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