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The charity fat cat debate misses the point: charities are comprised of two incompatible tribes

There’s been a lot in the press over the last week about so-called charity fat cats. Let’s have a quick recap. The Telegraph splashed last Tuesday with a report on the pay of CEOs on charities in the DEC consortium. The article had been carefully constructed to support an argument by Priti Patel MP that charities are unaccountable. Patel argued that ‘hard-pressed taxpayers deserve to know how their money is being spent’, which is an ostensibly fair point but suggests a cover up (all the figures quoted by the ‘research’ were taken from the annual reports on each of the charity’s websites) and fails to account the fact that charities which get government grants have to account to the relevant government department on their effectiveness. The performance of the British Red Cross over a three-year period was analysed thus: ‘a one per cent fall in the charity’s donations and a three per cent fall in revenues’, neatly forgetting that the BRC raise more money when there is an emergency and less when there isn’t: we should be glad when their income falls. And throughout this week there’s been a general smear that charity CEOs are a bad thing because some of them worked in the 1997-2010 Labour governments and are therefore ‘obviously’ less fit to run a organisation than someone retired or otherwise able to work for free (AKA someone rich) or who has no experience of running something complicated like a government.

The truly shocking quote in the piece came from William Shawcross, who chairs the Charity Commission. He said:

In these difficult times, when many charities are experiencing shortfalls, trustees should consider whether very high salaries are really appropriate, and fair to both the donors and the taxpayers who fund charities. Disproportionate salaries risk bringing organisations and the wider charitable world into disrepute.

Oh dear. That is a little like saying that Tony Gallagher, editor of the (profitable) Telegraph should bear in mind the circumstances of Alan Rusbridger at the (loss-making) Guardian when discussing his remuneration, because this would bring newspapers into disrepute. If that sounds like an odd analogy, because the newspaper industry is not the same as the ‘charitable world’, then that’s partly because British charities lack definition, and the leader of the Charity Commission should know this. Other sectors don’t expect all their component organisations to behave the same – and charities would find it impossible.

For charities face a paradox: they epitomise great causes which inspire millions of people and yet as organisations they themselves are often misunderstood. There has been considerable difficulty in even defining what constitutes the sector – which differs from country to country and is affected by historical, political and economic factors – for example, in the UK, the demand for organisations providing welfare fell away after the growth of the role of the state (though business is currently booming for soup kitchens), while in former-Communist East Germany there was little role for the sector, and it has had to grow rapidly since reunification.

Within the UK, there may be some limited consensus around some functions that could be held by not-for-profit organisations: they may be service-providing, offer mutual-aid, act as a pressure-group, undertake individual advocacy, or provide resource and co-ordinating functions for the sector as a whole (Kendall and Knapp, 1995). It will be obvious straight away that many if not all of these functions could actually be carried out in the private sector. It is perhaps for this reason that many in the voluntary sector have chosen to define it for its ‘voluntary-ness’. For this group, which I shall call the ‘values’ group, it is the inputs that are important: often the 50p collected here and there to raise money for an air ambulance, the voluntary hours provided by supporters. Often there is an assumption that whatever volunteers do is of itself of benefit regardless of the impact. Raise money for new chairs and that’s a good thing, regardless of whether the chairs were needed in the first place.

During the last thirty years, an opposing, ‘managerialist’ aproach has gained considerable ground, often using techniques developed for the private sector. Sometimes this is because of the growth of contracts and partnerships between government and the voluntary sector, which require the charity to introduce formal structures. This approach has been marked by a great deal of cynicism and unease within the sector, including the suspicion that hard-won achievements, often on a shoestring, will be devalued by managers on large salaries experimenting with the latest business fad fed to them over a luxury lunch by expensive consultants, before upping sticks to their next high-paying job (see Courtney, 2002). For the managerialists, it’s the outcomes that are most important: what impact the organisation makes against its targets. The cause is what matters.

Thing is, the ‘values’ group and the ‘managerialist’ group don’t always play well together. Too often, the values group see the managers as illegitimate – not ‘proper’ charity people – while the latter can see the former as more interested in their own agendas than the cause. This may or may not be true, but upsets the values people, who see their own efforts as having been belittled.

For many charities, this isn’t a problem: their culture will be compatible with one or other approach and that’s fine. For others, a move to a managerialist approach may actually be in tune with, er, values values. For example, the National Trust’s reinvention over the last decade has actually meant a more meaningful role for its army of volunteer guides. But for a large number of charities, the tension between the two tribes can, if not addressed, become a horrible distraction, leading to internal battles.

The sector glosses over these issues at its peril, but unfortunately there has been little place for nuance in the last week. (Nor is there likely to be any nuance while the debate is framed by the need to keep a story going during the silly season. Trying to relive its finest hour – the publication over several days of the CD containing MPs’ expenses – the Telegraph kept the story going as long as it could, finishing with a self-congratulatory greatest hits package this afternoon, as it presented a suggested working group comprising the Charity Commission and National Council for Voluntary Organisations as a ‘crackdown’.) Elaine Nicholson, of Action for Asperger’s, saw a chance for some publicity for her own charity, and wrote a piece for the Mail’s letters page. Nicholson says she works 60-80 hours a week for the charity and doesn’t draw a salary. No doubt Action for Asperger’s is an excellent organisation, and full marks for the PR initiative, but I think that Nicholson has confused the issue by suggesting that being a donor is intrinsically part of a CEO’s role. Meanwhile, Charlie Elphicke MP has kindly limited charity to ‘the volunteer rattling a tin, front line work relieving poverty…’ He complains about charities ‘hobnobbing at conferences where they talk about governance’. Presumably Elphicke will be speaking out about the charity exhibitors at the Conservative Party Conference. But I don’t know whether to be depressed more about his dismissal of governance (that’s how we keep costs DOWN, Mr Elphicke!) or his assumption that charity is only about the poor. Don’t Elaine Nicholson’s Asperger’s sufferers count if they’re wealthy? How about unpopular causes? Prison visits? Work with asylum seekers? (Now there’s an unpopular group.)

What we’ve seen this week is a set of assertions, made largely by the values camp and taken up by others who want charities to stop doing things that they personally don’t think they should be doing. The sector is too independent and free-spirited to fall for that. It’s just a shame that some folk at the top of the sector’s regulator don’t seem to know this.

References

Courtney, R. (2002). Strategic management for voluntary nonprofit organisations. London: Routledge

Kendall, J. and Knapp, M. (1995). ‘A loose and baggy monster: boundaries, definitions and typologies’ in An introduction to the voluntary sector. Davis-Smith, J., Rochester, C. and Hedley, R. (eds.) London: Routledge

2 comments on “The charity fat cat debate misses the point: charities are comprised of two incompatible tribes

  1. Pingback: Happy birthday to Cafe thinking | Cafe thinking

  2. Pingback: Charities should get off the mat: report from the Liberal Democrat conference | Cafe thinking

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