Charity sector suffers unfairly from groundless myths

Administration costs of Irish charities remain in line with international norms

Company records from 2015 make it clear that only 1.2 per cent of people working for nonprofits are paid more than €70,000, compared with 12.8 per cent of the workforce at large.

Company records from 2015 make it clear that only 1.2 per cent of people working for nonprofits are paid more than €70,000, compared with 12.8 per cent of the workforce at large.

 

With every fresh controversy about the charity sector, commentators revisit some of the myths about it that have done so much to depress public confidence and trust. These myths deserve to be examined if the baby is not to be thrown out with the bath water.

So what are the myths, and why is it important to interrogate them?

One popular myth is that charities soak up unreasonable levels of public funding in administrative overheads, at the expense of the beneficiaries they have set out to serve.

Accountability needs to go hand in hand with transparency, and in this digital age we can surely do something to improve on the Byzantine arrangements for reporting that plague this sector

Actually, many charities would contend that their biggest avoidable expense is the cost of doing business with the State. Most of the larger charities are required to make at three or four sets of mandatory regulatory disclosures every year, and that’s before counting the administrative overheads associated with being accountable for funding to up to half a dozen government departments and agencies – most of whom want the same information with minor variations.

Accountability needs to go hand in hand with transparency, and in this digital age we can surely do something to improve on the Byzantine arrangements for reporting that plague this sector.

Salaries

Another persistent myth is that nonprofits – including charities – spend too much on themselves, in the form of inflated salaries.

This just isn’t true.

Company records from 2015 make it clear for the first time that only 1.2 per cent of people working for nonprofits are paid more than €70,000, compared with 12.8 per cent of the workforce at large. And more than half of the higher-paid nonprofit workers are employed by quasi-public bodies, where their salaries are pegged to public-sector grades. When those public-servant equivalents are discounted, fewer than 700 people working in nonprofit companies are reported as falling into the higher-paid category – a tiny fraction of the 83,300 people working in the independent nonprofit sector.

This means that unless you’re a public-servant equivalent your prospects of earning more than €70,000 are a fraction – maybe a 25th – of those enjoyed by people working in other sectors. Or your childrens’ prospects, if they’re considering a career in the sector.

Empty pot: charities are facing funding shortfalls after the departure of Chuck Feeney. Photograph: Peter Dazeley/Photographer’s Choice/Getty
The Charities Regulator is systematically promoting compliance with the Charities Act and pursuing breaches. Sector leaders and philanthropists have been promoting the adoption of performance codes and standards. File photograph: Peter Dazeley/Photographer’s Choice/Getty

The question of whether higher-paid people working in those voluntary hospitals, social-care providers, higher-education providers and other quasi-public bodies should be paid the same as their peers in the public sector for doing the same work is surely not in dispute. The question of whether charities should be acting as agents of the State to deliver public services is a separate one, and the two should not be confused.

Charity numbers

Which brings me to the most popular myth of all, the idea that “we have too many charities”.

Too many for what? Are we talking about duplication of services and the possibility of inefficiency and waste? Or are we talking about charities that provide services we think we should be sourcing otherwise? From the State? From the private sector? The public is now energised around these questions, thanks to the latest controversy to wash across our screens.

Individual charities themselves need to reflect on the quality of their public disclosures about their work and its impacts

In case anyone thinks there is a simple answer to these questions, there surely isn’t. If nonprofits – including faith-based organisations – are embedded in all kinds of ways in all parts of Irish civil society, it’s because this is the way we have organised things up to now.

There is evidence of momentum for change. The Charities Regulator is systematically promoting compliance with the Charities Act and pursuing breaches. Sector leaders and philanthropists have been promoting the adoption of performance codes and standards.

Individual charities themselves need to reflect on the quality of their public disclosures about their work and its impacts: it’s hard to see how you can expect people to trust you more when you tell them less, as 23 per cent of charities chose to do last year, in the form of abridged financial statements.

And there’s a role for the public. It’s not surprising that assumptions and half-truths have taken hold when it has been so hard to come by reliable information, and when the scale and diversity of the sector itself, and its multiple stakeholding relationships, have been so hard to grasp. Let’s hope that minds are open to fresh intelligence, and to paraphrase John Maynard Keynes, when the facts change, we alter our conclusions.

Patricia Quinn is managing director of Benefacts, which republishes regulatory data from many sources for the public good

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