Many practices support local charities to raise necessary funds for local projects, but how do you know if the charity you’re supporting is legit? Jane Hobson, head of guidance and practice at the Charity Commission, explains how you can audit your potential charity to ensure that every penny you give is going to good causes
The advice in this edited article first appeared on the Charity Commission’s website.
Working at the Charity Commission, people often ask me if they should support a particular charity. This is not advice I am able to give; it’s not what the regulator thinks, but what you need to know about the charity that matters.
This article is about how you find out what you want to know, based on the ideas expressed in the Charity Commission’s 2018 Public Trust and Confidence research. People want to know what happens to the money and time they give and to find that it makes a difference, and does what the charity said it would do. So how can you judge?
A good way forward is to use the Charity Commission Register. Here you can use a charity’s name or, even better, their number, to search for the charity. Successful completion of this first step means you’ve verified that they are a real charity on our register. The next step is to look at what the register says about the charity. You should consider these factors.
1. How do you know what the charity is doing and what difference it makes?
For this, you need to check the accounts section of the register page for your chosen charity in order to bring up the annual report/accounts (the left hand sidebar), which should explain what the charity is aiming to do, what work it undertook, the impact the charity has had and what they did with their money in the last financial year. If it’s not on our website because the charity is small, a member of the public can ask the charity for a copy of their report, and must be given it, (although they may have to pay the administrative costs). Many charities also include additional information on their websites.
2. What do they spend on carrying out their purposes, as opposed to on other things, like administration?
Under charity law there isn’t a set limit that charities must spend on fundraising or administration costs. The charity, in its report, should explain why they spend money on these things and how successful they have been. Large or complex charities often need administrative support to ensure the charity is well-run and spends money wisely.
However, charities with an income of £500k or more have to disclose what they spend on carrying out their purposes so, in many cases, you can look at, and assess, whether you find a charity’s administration or fundraising costs acceptable. You would not expect to find zero fundraising or administration costs except where the charity is very small-scale and run exclusively by volunteers; equally, a charity would need a very good reason to explain fundraising or administrative costs which take up more than half of its yearly income.
3. Has it filed accounts on time?
If a charity is late filing accounts there will be a red flag saying ‘documents overdue’ at the top of the page. This is flagged up because late filing tends to be symptom of the trustees not running their charity well and of underlying governance problems or a lack of openness.
4. Are there serious concerns about the charity?
Sometimes the register flags that a charity is in an inquiry; in most statutory inquiry cases this will also be flagged on the left hand side bar along with the opening case statement. A statutory inquiry means the Charity Commission has recently, or is currently, investigating the charity. This is a big step for us to take in response to concerns about the charity and so does not happen in many cases. If the charity has been investigated over the past two years, there will be a link to outcomes.
Are there other sources of information?
Yes. When you are a supporter of a charity you may be sent, or want to ask for, information about the impact your donation has made, and you can often find out a lot on their website. Some organisations try to assess the impact of charities, particularly around medical and international aid, though many are based in the US.
Practices should do their due diligence on any charity they choose to work with. If you’ve spent the time raising money for a good cause, it’s worth using the free resources available to check that those who the charity says will benefit from your donations actually will.