The charity's records show extraordinarily high administration costs
Every so often, a story comes along which puts the status of charities in the spotlight. Could the Captain Tom Foundation be the next?
According to the charity’s records, it received more than £1 million in donations last year. Yet it seems to have so far only doled out four grants of £40,000 apiece.
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Yet that is not the extent of its spending. While the Foundation is sitting on £600,000 in reserves, it has thus far managed to spend over £160,000 — as much as its combined grants to date put together – on ‘management’.
They have also spent almost £210,000 on fundraising and £160,000 on ‘outreach projects’. Yet the total amount listed for ‘costs of generating voluntary income’ is just £31,204.
Of course, raising funds probably wasn’t difficult given the enormous publicity and public goodwill towards Sir Tom, so that low cost makes some sense. But it raises the question: was it really efficient or effective to divert all that charitable giving into a new foundation, which has consumed so much of it in costs, instead of simply sending it directly towards charities in need?
Given that it has so far only disbursed £160,000 — and spent far more than that on its own activities — how long will it take the Captain Tom Foundation to actually generate more money for frontline charities than it has diverted? Especially as Sir Tom’s name begins, inevitably, to carry less pull as time passes.
And like any institution, once established and staffed, the charity will have an institutional imperative to keep itself going, consuming more funds in the process. Hence that extraordinary ‘fundraising’ figure.
What could explain those extraordinary management costs? It isn’t regulation; ‘governance costs’ are listed separately, coming in at just over £32,000. Perhaps it reflects inexperience on the part of the management team. Or, a cynic might suggest, simply a way for the organisation to provide a very comfortable living to those who run it, regardless of its ‘non-profit’ status.
Whatever the reality in this case, the figures speak to a deeper truth about the charitable sector, which is that it regularly squanders money meant for good causes.
Even without malfeasance, lots of small charities inflate the share of donations diverted to management and other costs. They also enjoy a favourable public perception which often impedes proper scrutiny, as the now infamous debacle over Kids Company demonstrated back in 2015.
What can be done? Any Government intervention would need to be made with care — the last thing we need is the State smothering yet more civil society institutions, and the best charities do great work.
Perhaps the solution should be, to borrow a military term, to set a minimum ‘tooth to tail’ requirement for charitable status. In other words, the share of funds going to front-line work versus other costs. This would go some way to ensuring that when a well-meaning member of the public hands their money over, the bulk of it ends up where it was meant to go.