Press and Blog

Charity Due Diligence

Far too often we see negative news stories about charities; how they are mismanaged, what is going on in the background and why every penny does not go to the cause. With every negative story, people are becoming more and more disillusioned with charities.

Noticing a theme?

In the UK, Kids Company closed after a number of allegations which led to the charities ultimate downfall. Their financials were exposed and what they reported to the public was far from the truth. They deceived and betrayed the public, the government and the kids they were supposed to be helping. This was avoidable.

Recently in Ireland, Console hit the headlines when their CEO completely took advantage of incoming donations to line his own pocket. Had this not been exposed through some investigative journalism how long would this have continued for? The board was rotten to the core and this would have continued without intervention. He deceived the public, the government and those who were in dire need of help. This was avoidable.

A few months ago Goal were under the microscope and subsequently had funding cut from USAid when there were question marks raised about supply chain irregularities to Syria. This scenario involved third parties and highlights the need for transparency and clarity at every level of a charity. This was avoidable.

Who suffers?

When all is said and done who are the ones that suffer? Those who need help have been abandoned by the people they thought were looking out for them. Children who relied on Kids Company are left in the dark; those suffering from depression will feel betrayed; refugees access to care packages in doubt. How does this negative news impact on donor sentiment? Naturally, people will take a step back and remember seeing X, Y or Z charity in the news and hesitate in donating. All charities will suffer as more of these stories come to light. It plays on people’s minds and they lose faith in the sector.

This is avoidable!

We are bucking this trend and giving the power to the donors. Charity Clarity is a charity rating and assessment tool that uses 100 different data points and 18 metrics to give a charity a rating out of 5. Focusing on Financial Health, Accountability and Transparency and Accessibility this assessment gauge a real understanding of the health and transparency of a charity. Effectively this is an independent audit of a charity, a level of due diligence that donors simply don’t have time to do themselves.

In this grey area, we are shedding light

This platform is giving a stage for charities to showcase their success stories and it gives donors confidence to invest. Divine Onkar Mission is the top rated charity on Charity Clarity’s database with an overall score of 4.39. Have you heard of them before? They are obviously doing some good work and this should be rewarded. Akademi South Asian Dance UK are financially sound with a 4.6 financial rating, this in a time when arts spending has been massively reduced, a fantastic achievement by all involved. One of the most accountable and transparent charities is Sense International (4.35). The work they are doing is incredible and it stems from the structures it has in place. Accessibility is a key indicator of how donors can relate to charities, how charities can build a lasting relationship with donors. The Clark Foundation sees this as a high priority and donors can relate to this. They score 4.89 in this section and can build on these foundations going into the future.

Who benefits?

Everyone. First and foremost the focus can shift back to those in need. Resources can be geared towards the person suffering from depression, the child who needs help and the refugees who are caught in conflict. The people who are suffering return to being the reason charities were set up in the first place. Charities start thinking about what they need to do to improve, what will help them focus on the cause that is close to their heart. Donors feel confident making investment decisions and can rest assured that their money is going to the right charity. Charities often only make the news due to a negative story and we don’t always hear the good they do. But if we can help reduce them negative stories then we can stop saying “This was avoidable”.

If you are interested about Charity Clarity, get in touch with Cormac at cormac@economicpolicygroup.com.