Matt Ridley from the UK: Charities in need of reform

David Cameron, luxuriating in the prospect of weak opposition, has a chance to think about radical reform of both the private and public sectors. But there is a third sector that requires his attention even more urgently. He is well known to want to harness the generosity of Britain. To do that effectively the charity sector needs some big thinking — because after decades of regulatory neglect it is starting to unravel and is in crisis.

The collapse of Kids Company and the British Association for Adoption and Fostering should ring alarm bells throughout the sector: fear of failure or takeover is one of the things that keep private companies effective and, for too long, charities have not felt that breath on their neck. They have been given the benefit of the doubt because of their noble intent.

Many charities are wonderful institutions, doing tireless work for little reward. But too many are low on compassion and have thin financial reserves and big pension fund deficits, making them vulnerable to donors going on strike following revelations of problems.
Some charities are running on fumes. Others have governance arrangements that would never pass muster in private firms: Alan Yentob has chaired Kids Company for 18 years. A few are little more than arms of government delivering public services, or have become overtly political, or covers for extremism.

A charities bill going through parliament offers the chance to begin to tackle reform. The prime minister has asked Sir Stuart Etherington to look into the existing system of self-regulation under the Fundraising Standards Board. Here’s a shocking fact for Sir Stuart to chew upon: the FRSB’s last annual report speaks of 20 billion fundraising requests being made in the space of a year. Yet, its board found the time to look at just one complaint — which it rejected. A body that receives 98 per cent of its funds from the charities that it regulates could never have been expected to bite the hand.

After years of factory trawling for funds, the big charities are finding it ever more costly to find fish, as recent “chugging” scandals and the plight of the poppy seller Olive Cooke have shown. In the space of a few years, the cost to a charity of getting one of the chugging agencies to persuade a passer-by to sign up to a direct debit has gone up from £40 to £120, which means that even less of a donor’s money goes to the good cause. (This leads to a vicious circle of even less trust in charities because so little gets through to those we wish to help.)

Here’s another issue. A parliamentary question by Lord Marlesford recently revealed that the RSPCA has access to the police national computer, via the National Police Chiefs’ Council criminal records office; and that its Scottish cousin, the Scottish Society for the Prevention of Cruelty to Animals, has — even more surprisingly — direct access to the computer. These are both organisations with no accountability to the electorate and, with fundraising benefits from the PR opportunities presented by arrests and prosecutions, this is a recipe for malpractice.

The Royal Society for the Protection of Birds runs some fine nature reserves and conservation initiatives. But why on earth is it campaigning against fracking — which it knows offers far less threat to birds than wind farms do? It must be because getting mentioned in the news keeps donations flowing.

Heather Hancock’s independent review for the BBC last year on its impartiality with respect to rural issues found an over-reliance of BBC newsrooms on the RSPB for virtually all rural issues, not just bird-related ones: “Time after time, when asked who their top contacts would be for a rural story, BBC programme makers or journalists quoted the RSPB first.”

Many charities have suffered egregious activist entryism, to the point where their leaders have views wildly at variance with those of their donors. William Shawcross, chairman of the Charity Commission, worries that old ladies who give money to the RSPCA thinking it will help to save stray cats don’t expect its executives to compare farming to the Holocaust or call for the end of pet ownership.

In the case of Islamist extremism, the problem is less one of innocent donors duped into supporting extremism than one in which both donors and executives may sometimes be keen to disguise extremism inside moderate charities. Such abuse of charitable status clearly does happen.

Some charities have become little more than fundraising businesses, who spend the funds they raise on fundraising. Take Greenpeace, for example. It aims to save the world, but its output consists largely of stunts, such as the shockingly ill-advised trespass on the ancient Nazca lines in Peru last year, whose purpose was to get publicity . . . and raise funds. The RSPB at least spends money on nature reserves and runs conservation projects, but even it has been upbraided recently by the Advertising Standards Authority for misleading advertising on how much money was going into conservation, rather than marketing.

Some charities have become overt political campaigners. Last December, the Charity Commission reprimanded Oxfam for a poster attacking the government’s austerity policies. The Indian government has been cracking down on Greenpeace, saying that in “selectively targeting those projects that were of great national importance for industrial growth and development” it may have crossed the line “between creating environmental awareness and creating social unrest”.

Many charities now depend heavily on government for their funds, and yet are immune to freedom-of-information requests. Worse, they spend some of those funds on lobbying government for policies favoured by the very civil servants who doled out the cash to them.

The Institute of Economic Affairs calls this circular process “sock-puppetry”, and it is especially rife in Brussels. It is hard not to see it as corrupt.

This is a partial list of the things that seem to be wrong in the charity sector. I repeat that most charities do brilliant work, including, I hope, the ones that I support. But it is a sector of the economy ripe for the sort of radical cleansing and scrutiny that the private and public sectors have at least begun to endure.

Matt Ridley, a member of the British House of Lords, is an acclaimed author who blogs at www.rationaloptimist.com. This article was first published the Times.