The Accountability and Decentralisation of Charity.
An administrative and organisational philosophy to which I closely align myself is that of decentralisation. I think it almost without question that the efficacy of any agency can be vastly improved should the authority for decision-making be delegated to the lower tiers of an institution’s hierarchy.
The process of shifting power closer to the citizenry increases the flexibility and adaptability of charities, as local needs become better recognised and organisational processes more successfully tailored to the community. By virtue of this proposition, an institution constructed in a manner which feeds information from the bottom up is better placed to develop valuable social capital and local knowledge whilst remaining accountable to the people.
Top-Heavy
Unlike smaller agencies in the third sector, larger charitable institutions suffer from crippling diseconomies of scale that can have a detrimental impact upon the scope and effectiveness of their intervention. As charities like Oxfam expand, an ever increasing managerial burden arises where decision-makers are distanced and isolated from those people for whom their judgments are made. Information moves less efficiently and more of their time is expended on the charity’s administration, marketing and employment.
A recent example of this can be seen with Prince Harry’s charity Sentebale, aimed at supporting children orphaned by the African AIDS crisis. The charity’s accounts showed how, of £1.15 million donated during the 07/08 financial year, only £84,000 was directly invested in supporting African orphans: £250,000 was spent of staffing costs, with an unidentified member being paid £100,000 of that figure; £86,000 was spent on setting up a website; vehicles accounted for £46,000 of the annual expenditure; and £26,000 on fixtures and fittings. The list goes on.
It should be borne in mind, however, that new charities such as Sentebale inevitably incur large operating costs as they develop their infrastructure, become established in the community and begin sourcing all-important social capital. Accordingly, Sentebale state that ‘since these accounts, much more money is now being spent directly on projects. By the end of August [2008], Sentebale will have spent at least a further £225,000 directly on projects – a three fold increase on the previous year.’
Accountability
Nevertheless, this should not detract from the fact that regulators such as the Charity Commission frequently uncover scandal and fraud amongst numerous well-established charities. Each time such a story comes to light, charities large and small are disadvantaged by the transgressions of the few as confidence in the non-profit sector declines.
Almost a decade ago, Blue Peter’s most successful fundraising event accumulated over £6.5 million for the Romanian Orphanage Trust. After a subsequent Newsnight investigation by Susan Lloyd-Roberts, it transpired that only twelve buildings had ever been erected using the money, with many hundreds of thousands of pounds missing. Moreover, a third of all charities still provide no audited annual accounts, with a quarter providing no returns at all.
Clearly there is room for much tighter fiscal accountability, hindered perhaps in part by the false confidence and indifference fostered by the presence of a regulatory body. While certainly the misuse of capital is a very important issue in need of urgent rectification, it is equally important that we do not become too despondent toward the virtues of the third sector; charitable contributions from the public have been falling year on year since 2002.
Decentralisation
Aside from increased fiscal liability, a careful balance also needs to be upheld between decentralised practices and ensuring that charitable cannibalisation is kept to a minimum. For instance, while I support local initiatives and community working, in early 1990 there were almost as many AIDS-related charities in Britain as there were actual sufferers.
Thus, while large charitable organisations may exhibit their own problems, smaller organisations can be equally harmful in impeding the efforts of frontline workers, duplicating already existing procedures and poaching the resources of other charities. While charities should strive to decentralise within their working practices as much as possible, so as to focus upon and listen to the customer as much as possible, too much competition between charities can have its own disastrous consequences.
On this basis I think it a viable and preferable approach for new philanthropists wishing to enter the third sector to take a leaf from the book of John Humphreys, the BBC radio and television presenter. During a visit last week to a conference held by the National Council for Voluntary Organisations, I came across a small magazine article that interviewed him about his own organisation.
From Charities to Trusts
Rather than taking the usual path of setting up a brand new charity and following in the steps of numerous other organisations, Humphreys instead established a trust. The majority of charities are small and already supporting local communities or groups. However, many are struggling. As a direct consequence of being small, various valuable and earnest charities are unable to access government grants and lack the capital, infrastructure and logistics to market their services effectively. Acknowledging that their size should not be attributed to insignificance in the shadow of larger charitable institutions, John Humphries established the Kitchen Table Charities Trust, which donates 99p in every £1 it raises direct to existing and effective local charities.
All these tiny charities have one thing in common: a struggle to raise enough money to keep going. That is what the KTCT does. We raise the money and feed it to those who are doing extraordinary, life-affirming work. This […] is not meant as a reproach to the big charities that raise and spend tens of millions. I know they do a good job. But I also know […] that there are millions of people in this country who would give more if they knew that their money would really change lives.
Living in a rich and prosperous society, I feel we have a moral obligation as citizens to assist those left behind by the processes of development. We should not allow the transgressions of the few dissuade us from this responsibility, but instead use their misdemeanours as motivation for us to watch more carefully the actions of the third sector and precisely where and to what end our donations are being invested. To this end it is also important that charities new and old are not blinkered toward the current endeavours of the third sector environment, and should instead seek to support where possible any pre-existing agencies exhibiting a demonstrable and proven success in their particular field of expertise. Similarly, they should aim never to become of such a scale that they lose sight of their original purpose and become less proficient at ameliorating the plights of the disadvantaged.
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Image from the Telegraph.
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Nice article.