This week is Trustees’ Week, which shines a light on the nearly one million trustees in the UK who show great dedication to help a wide range of charities and organisations.
At Higgs, our charity lawyers will be celebrating Trustees’ Week and these often unsung heroes with a series of articles looking at pertinent topics around the sector.
Today, Tora Pickup looks at what lessons can be taken from the Charity Commission’s annual report.
Each year the Charity Commission carries out important research into the level of public trust in charities, with the most recent research published in July. In case this passed you by with the excitement of the summer, we’ve highlighted a few points from that research below.
Firstly, trust and confidence in charities remains high (with a mean average of 6.3 out of 10), and second only to doctors (mean average 7.1 out of 10) in the list of the 11 social institutions considered within the report. Further good news is that this has increased by 0.1 since the research was conducted in 2022. Charities also compare very favourably to MPs and Government ministers, who come in with mean average scores of 3.3 and 3.2 respectively!
While trust is at a stable level - and happily improved from the lows recorded in 2018 - the level of trust within society differs depending on the ‘security’ and ‘diversity’ of those asked. The level of confidence and trust is higher (mean average of 7.0 out of 10) for those who are classified as in ‘high security, high diversity’ groups and a mean average score of 5.6 out of 10 for those classified in ‘low security, low diversity’ groups.
The Charity Commission has drawn out from its research over recent years four key factors against which charities are assessed by the public:
- Where the money goes: That a high proportion of charities’ money is used for charitable activity
- Impact: That charities are making the impact they promised to make
- The ‘how’: That the way they go about making that impact is consistent with the spirit of ‘charity’
- Collective responsibility: That all charities uphold the reputation of charity in adhering to these.
The better charities perform against these factors, the more they will be trusted by donors.
The report showed 73% of people think charities are making an impact and 63% believe they are well run. While encouraging numbers, a concern remains within the wider public that donors’ money is not reaching the intended beneficiaries. When asked, 21% of the public were not confident that the charities they knew about were delivering a high proportion of the money they raise for those they are trying to help.
In the light of this, we suggest that trustees think about how they can report on the activities of the charity to provide reassurance on those aspects to current and potential donors. In many cases, this information will also be helpful for beneficiaries.
There is support for charities adopting a cautious approach to spending, and to limiting that spend on a charity’s core purpose, rather than taking a higher risk approach. The Charity Commission adds that the public does want charities to be actually using their charitable funds, not investing it all for the longer term.
“Charities therefore have public permission to use a sensible balance of the two approaches, where funds are used to maximise aid without taking excessive risks”.
Interestingly, when compared with the general public, a higher proportion of trustees were in favour of a cautious approach to spending, and on restricting charity spend to the charity’s core purpose.
As trustees will know well, it is very important that a charity’s funds are spent in furtherance of its purposes. Trustees should regularly review the objects of the charity to make sure they know how the charity’s activities should be focused and can make decisions about expenditure accordingly. We’ll talk a bit more about this in our discussion about objects later in the week.
While there is also support for charities responding to social and cultural debates (41%), and for campaigning for changes benefitting their beneficiaries (50%), this is less universal with a proportion undecided in each case.
As shown in the percentages noted above, there is greater support for campaigning for change and this kind of activity will be particularly relevant to some charities. Trustees will need to be careful about the way such campaigning is conducted. In particular, it should remain non-political unless it is directly related to the furtherance of the charity’s objects. We’ll talk about this aspect in more detail tomorrow.
Perhaps unsurprisingly, the Charity Commission found that the greatest level of trust is felt for charities which are small, run by volunteers rather than paid professionals, working in a local area rather than nationally and/or serving a cause of particular interest to the respondent.
The Charity Commission summarises that the responses show the public is more confident that a charity is using the funds effectively when they can see the impact in their own community. Similarly, there seems to be a sense of increased transparency where the impact of the charity’s activities is seen in the community, or where volunteers are running the charity and therefore reducing salary costs. Where these aspects are relevant to their charity, trustees might want to consider how they might emphasise these aspects in their communication with donors and potential donors.
