The True and Fair Foundation is to publish another report criticising large charities for being inefficient, this time focusing on gift aid and other reliefs claimed by charity shops.
The charity, which is run by philanthropist Gina Miller, will publish a report titled Lifting the lid: a review of income generation and governance costs and charity shops.
The report will call on the government to take action to make large charities more transparent and restrict the amount of gift aid that they can claim.
Sector leaders condemned the report as "embarrassingly poor" and full of "downright inaccuracies".
The report's key recommendations are:
- The government should urgently set up an independent inquiry to investigate and improve the transparency and efficiency of the UK charity sector
- Gift aid should be restricted to the percentage of a charity’s income spent on charitable activities
- Any charity, over an agreed limit, receiving gift aid or any other form of government funding should be subject to the Freedom of Information Act
- The role and value of ‘traditional’ charity shops should be urgently reviewed. The mandatory 80 per cent minimum business rates relief for charity shops should be reduced by 10 per cent a year to 50 per cent in three years’ time
- A best practice maximum benchmark for fundraising and governance costs should be introduced
- The Financial Reporting Council (FRC) should urgently introduce a new format for the charity Statement of Recommended Practice (SORP).
Civil Society News understands that publication of the report was originally slated for Monday.
The previous report from the True and Fair Foundation (TFF), A Hornet’s Nest - A Review of Charitable Spending by UK Charities, was strongly criticised by sector bodies for how it had interpreted the data. The Telegraph, which covered the research, has since published a clarification, and Ipso has since published a report on the dispute.
Miller told Civil Society News this morning that the most recent report was just a “draft report” and that she had “not signed it off” as final figures were still being double-checked. But she admitted that the report’s recommendations were unlikely to change significantly.
The draft seen by Civil Society News concludes: “There is little doubt that ‘share of voice’ is being dominated by big brand charities. TFF’s experience and informed view is that the majority of charities have charity rather than self-enrichment in their DNA and are being unfairly penalised by excesses found elsewhere in the sector.
“The sector’s first response is to be defensive, but given the statistics in this, and previous TFF reports it is our view that the government should be taking more responsibility in reforming the sector so donors have the ability to make better informed decisions, and that a true and fair competitive market is operating.”
For this report the True and Fair Foundation has highlighted the profit margins at ten large charity shop chains. It claims that the average profit margin for the group is 17 per cent. The report claims that this is lower than high-street retailers. It also claims that a US charity, Goodwill Industries, converts 83 per cent of its income into profit for charitable activities.
Figures compiled for the latest Charity Shops Survey, produced by Civil Society Media, found that for the same group of charities the average profit margin was 22.4 per cent.
The True and Fair Foundation has also undertaken further analysis of its top 50 largest charities’ spending on governance and fundraising costs. It claims that they spent 22 per cent of income on the combined activities and says this is double the average for the rest of the sector.
It concluded that: “Defending the status quo at a time when we need to be encouraging individuals, philanthropists and corporates to give more of their time, talent and money to ensure a true and fair society is inexcusable and self-defeating. There needs to be greater focus on improving financial performance which should, in turn, bring about considerable rewards for the sector.”
News: Sector criticises 'embarrassingly poor report' from True and Fair Foundation
Blog: What are the problems with the True and Fair report
Update
The full report has now been published.
