All charities are not equal and the smaller local concerns need all the help they can get



Alan Cunningham
Alan Cunningham

Alan Cunningham is a partner at Alexander Sloan, the Glasgow and Edinburgh- based Chartered Accountant and Business Adviser.

He has 24 years’ experience in the third sector, working with charities of all shapes and sizes, ranging from neurological research to horse riding for the disabled.

Few peoples in the world give more generously to worthy causes than the British. Their charitable largesse consistently tops international league tables for per-head donations.

In recent years, however, there has been a creeping sense of unease about the governance and administration costs of some of the UK’s larger, very high profile charities and considerable discussion about their campaigning roles.

At the top tier of the third sector, the remuneration of chief executives has mirrored the private sector in an inexorable upward spiral and the phenomenon of paid managers and staff in High Street charity shops has become the norm rather than the exception.

Chuggers, or charity muggers, dominate the footfall choke points in city centres and debate about their tactics - which some say verges on the intimidatory - has divided people who otherwise are enthusiastic charity donors.

All this is part and parcel of the necessary examination of the third sector, which provides a wide range of very welcome services and reliefs for some of the most vulnerable people in the UK and around the world.

But there is a danger that it obscures the lower-profile but highly meritorious activities of the innumerable smaller charities which are battling to keep their administration and governance costs down and are squeezing every pound to do so.

Today there are 23,735 registered charities in Scotland alone and the vast majority of them are run by people for whom fund-raising means a ceilidh or a local social media campaign rather than newspaper adverts and chuggers on the High Street.

Many of these smaller charities are run by extremely gifted people who, had they been in the commercial world, would have excelled. Instead they have made substantial sacrifices to keep charities going, rather than going into retreat or even folding.

They have a tenacity, a resilience and a never-say-die attitude, and continue to try to provide more services with fewer resources. There is a stark contrast with commercial businesses, many of whom, faced with similar cost and resource pressures, have little compunction about pulling the plug.

They are squeezed on two fronts: running costs - that is, support costs as opposed to coal face services and the imperative to trim waste at every opportunity; and governance costs - their dependence on external advisers to ensure regulatory compliance.

The second consideration is of major importance. Many charities are chasing the same sources of funding, such as trusts, and a good set of accounts, well-presented is effectively the charity’s shop window for donors.

Within the confines of legal and accountancy practices across Scotland, there exist numerous 100 year old charities which continue to fulfil their charitable objectives largely due to being investment based and having been led by prudent and diligent Trustees.

However, many third sector organisations depend on local authority funding and even a 5% cut in their grant can have serious consequences. They can find such cuts difficult to understand in a local authority landscape of overspend, waste and six-figure salaries.

They have also been adversely affected - like commercial businesses - by the EU and UK government-driven imperative for an exhaustive and repetitive public sector tendering process in which the losers spend substantial time and resources for no gain.

What we have to remember is that local charitable activity can often be part of the glue that binds communities together and local concerns are operating in a very difficult climate.

The national and internationally operating third sector concerns have created business model which works for them, but smaller, selfless local charities really need all the help they can get.