THE BLOG

We Look to Charities to Raise Money, Then Moan When They Spend It - Why?

13/03/2013 21:27 GMT | Updated 13/05/2013 10:12 BST

Two things crossed my Twitter feed this week that got me thinking about our relationship with charities.

The first was this story in charity trade magazine Third Sector. In it, philanthropist Gina Miller sets out a series of attacks on the charity sector - lashing out at "careerists" who "simply want to climb the ladder" and urges the Charity Commission to cap the amount spent on administration, and attacks 'six figure salaries' in the sector.

The second is a Ted Talk by a chap called Dan Pallotta in which he sets out the case for charities to spend lots of money - and questions why we find non-profit organisations' spending habits to be so distasteful.

I've worked in charities of differing sizes and different incomes. I haven't, hand on heart, seen much in the way of waste. I've worked in businesses of different sizes and not seen waste there either - both set out to deliver a big impact on as lower costs as possible. You don't need to sit in a Dragons' Den chair to understand the basic rules of success: spend money smartly, hit targets, deliver results. In the not for profit sector your results are focussed socially; in business it's about profits. The journey to these outcomes is reasonably similar: excellent people, high quality work; rigorous measurement of how you're doing.

So why do we give charities such a hard time for spending money on 'administration'? It's worth looking at what administration actually is in that context: managing fundraising and memberships; generating publicity via press, advertising or social media (or ideally all three, but that's another blog); making sure the organisation's office runs smoothly and has the technology to function properly. I struggle to see any of these that aren't legitimate activities - indeed, if I'm giving my hard earned cash to organisations I want to take it as read that these are done well.

Miller's argument is that charities waste money on admin and pay their staff too much. She criticises 'careerists' who are just in it for the salary and to climb the promotional ladder. She says that: "Charities should be solving problems, not creating business-like structures that can go on infinitely."

It's a remarkable argument, particularly from someone with a business background. It's strange that someone with such experience would be concerned about staff being too professional, too focussed on doing well and getting promotion. It's an argument that says "spend money better, but don't get great staff to spend it. Do the very best possible work, but don't expect to be recognised for it or promoted for it or make it a career. Deliver outcomes that really matter, but don't plan for it, structure it properly and certainly don't measure how well you did."

Here's why I think Miller is wrong. It seems to me that what she decries as waste in the sector this is exactly what you'd want in a sector which needs to be so incredibly careful with donor money. Further, it seems to me that solid structures are the solid base from which problems are solved. They are crucial, not some kind of add on.

When you're trying to get people to donate you're not making a simple moral case in a vacuum - and you're not competing solely with other charities. You are another actor in a marketplace setting out why your product is special and why people should buy it. As Pollatta rightly says In the private sector brands throw millions at advertising to make that happen and are celebrated for it - in the third sector you get accused of waste if you do the same. Advertising spend for brands is considered an investment and so should charity marketing be. Fundraisers are adept at turning a few thousand pounds into hundreds of thousands with clever, creative initiatives. But these initiatives involve a level of risk - and often the current discourse around spending means risk is shied away from. Money shouldn't be spent frivolously, of course, but I want to know that it's being spent smartly. If this is on marketing and the charity can convince me that this will lead to solving the problem that I support them to solve, then that's fine with me.

We expect Charities of all sizes to be at the forefront of solving the great social challenges of our time, but attack them if they spend too much money doing it. It comes from our perceived ownership of those organisations because the transaction is so personal, driven by our morals not our desires. But if we think about it for any more than an outraged second, it's obvious that administration is incredibly important and it needs to be done in a professional, organised way. Charities, like any other organisation, private or public or voluntary thrive on great ideas that solve problems. Ideas are free - but fostering the environment in which to have them isn't. Charities find themselves competing in a world where consumers are bombarded with messages about where to spend their money or their time. I want the ones I support to great innovators and great deliverers.

There isn't a business, public sector organisation nor charity that couldn't be leaner, smarter or better in some respect, and charities could do more in reporting back to supporters about how they're doing and where the money's gone. But the debate needs to shift. Big challenges need big solutions and if it's a choice between Gina Miller or Dan Pallotta's charity for my 20 quid each month, I know who I'm choosing.