Charities have been "poor as a sector" at explaining their work to donors and supporters, the chair of the Charity Finance Group told his organisation's annual conference today.

Ian Theodoreson, chief financial officer of the Church of England, said that in particular, charities had been poor at explaining how money given to charities is used in practice.

"There is little understanding of the transaction that goes between a donation received and work delivered," Theodoreson told the conference in London.

"The idea that donors give money to paid fundraisers who give money to paid administrators who hire paid staff to deliver a service isn't well understood among the public," he said. "When the NCVO inquiry group looked into senior pay an alarming amount of people giving feedback said no one who worked in charity should be paid at all."

He said the ultimate question was whether it mattered that donors did not understand what charities did.

"I suspect in the short term it doesn't," he said. "But I'm of the opinion that every bad news story, every shock horror, chief executive paid for doing job story, chips away, bit by bit, at confidence in charity.

"We have been poor as a sector in explaining what we are about. In particular we have been poor at explaining how money flows."

He said that without improvements in explaining these issues the current generation of sector workers risked "denying the next generation the power and potential" of the sector.

Theodoreson made similar comments last month, when he warned that the sector was "extraordinarily disconnected" from the public.