Recently, I had occasion to log onto Barnardo’s website, and I noticed that just about the most prominent thing on it is an announcement that 95 pence of every £1 the charity spends goes directly on front line services.
But earlier this week, Barnardo’s published its annual accounts. These showed a total income of £245m, but direct charitable expenditure of only £194m. The charity spent £46m on fundraising and trading.
So this didn’t seem to add up. The charity clearly wasn’t able to spend 95 per cent of its income on children and young people and their families.
I asked Barnardo’s why this discrepancy existed, and its response was as follows (any emphasis my own):
Barnardo’s annual review states that 95p out of every pound goes towards our direct work helping children excluding trading and property development costs, both of which are self-financing (page 11, Annual Review 2012)
This accounts for the £46 million figure.
The annual report also states that ‘(the 95p) falls to 81p if the costs of trading and property development are included. However, both activities are self financing so the costs are cancelled out. These qualifications are repeated elsewhere on the website but not on the home page.
This suggests the real figure that should appear on the home page is 81 pence in the pound. To suggest that all your money goes on services except the money you spend on other stuff seems rather disingenuous.
Of course, I have some sympathy with Barnardo’s. We all know that admin and fundraising costs are a terrible measure of a charity’s effectiveness anyway, but it’s very difficult to persuade the public of this fact.
I shouldn’t need to persuade readers of Third Sector of the uselessness of admin costs as a measure of anything, but for anyone who still thinks measuring admin costs is a good idea, I recommend looking at this post by Caroline Fiennes and Kurt Hoffman, which (and I paraphrase) summarises the position something like this:
In a well-run charity, all expenditure pertains to charitable activities. Where else would it go? Shoes and handbags? Expenditure on raising more money to finance more work, or on governance to improve that work, is absolutely appropriate.
It turns out, they report, that high-performing charities spend more on their administration than do poorer-performing charities.
Still, getting that across to the public isn’t easy, so it’s hard to blame Barnardo’s for wanting to minimise the amount that it appears to spend on things other than services for children, even though I have no doubt it’s spending the money sensibly, and that any cash is spent with the best interests of its beneficiaries in mind.
But rather than publish a figure that doesn’t tell the whole story, it might be better never to have brought the subject up.
Personally, I’d like to see the whole charitable sector take issue with this notion of admin costs as a measure of efficiency, and blow it out of the water, rather than continue with the tactic currently used by many – attempting to suggest that admin costs are a good measure, and that yours are very small.
Charities, in short, could try trusting the public enough to put all the facts out in the open.