Charities play a vital role in society. People’s goodwill and generosity remain the lifeblood of the sector, but this is at risk if the public misunderstand what charities do and how they operate.
Around 200,000 charities are registered with charity regulators in the UK, providing a diverse range of services. This includes working with disadvantaged groups, contributing to tackling medical conditions, the promotion of the arts, education and amateur sport, and many other social and environmental issues.
Inherently charities are value-led organisations that care deeply about the causes they serve, but they also have to operate professionally or they might not survive. Donors want to know that the charity they are supporting financially is sustainable and accomplishing its mission.
Although many smaller charities may be run by volunteers, most larger charities need to spend money on operations and infrastructure, including hiring, training and retaining staff. Investment in technology and infrastructure allows charities to operate more efficiently and can save money in the longer term.
Charities can attract criticism about whether they are using the right mix of volunteers and paid employees, or whether too much is being spent on senior managers and overheads. Isolated incidents of malpractice in the charity sector can also influence public perceptions. These are some of the challenges that trustees will need to think about before they set up and operate a charity.
We hope that by tackling 10 common myths about how the voluntary sector operates in this guide, charity trustees, staff and their advisers are encouraged to communicate transparently on areas where misconceptions are prevalent. Not only will this help inform stakeholders, but it may also spark discussions around the board table about plans, strategies and policies that could lead to greater understanding and increased professionalism.
When donors understand why investment in fundraising, infrastructure and skilled staff is worthwhile, they are likely to appreciate the charity’s professional approach and agree to fund core costs. While charities should embrace business skills and commercial imperatives, other sectors can learn from the voluntary sector about purpose, innovation, commitment and courage.
The guidance incorporates perspectives from the accounting profession on the charity sector and has been written with contributions from BDO, Crowe UK and RSM representatives. The working party was chaired by Pesh Framjee, who has led non-profit teams at Arthur Andersen, Deloitte and Crowe UK.
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