Charities Helping Themselves

About 90% of Australian people donate an average of $400 per person to charity each year. But how much do the charities use to help others, and how much do they use to help themselves?  A survey by Choice magazine last month showed some surprising results.

Of the 11 major charities surveyed, all with exactly the same questions, nine responded.  Two, Lifeline Community Care Queensland and National Heart Foundation, refused to participate.  Of the nine that did participate, most answered only selected questions, ignoring questions that didn’t suit them.

What became evident to Choice was that it is nearly impossible to compare the charities, given that they each use different reporting methods.  There are no standardised reporting systems for not-for-profit organisations in Australia.  There are such standards overseas, including the UK, Canada and New Zealand.  In many cases, reporting and disclosure is voluntary, meaning charities do not have to reveal their financial situation if it doesn’t suit them.

Some of the major coordinating groups for charities stated that many charities figures are misleading, and many under-report the actual amount that is spent on administration, in a misleading attempt to appease their supporters.  There are no regulations in Australia to prevent this, as happens in the corporate and private sectors.

My own experiences working with many charities, including winning the Vodafone World of Difference Award in 2006 for my work, is that the charities are largely run by unqualified people.  In The Big Issue Australia, for which I won the Vodafone Award, none of the managers at any level had any qualifications in business, accounting, management, social work, or any other tertiary field at all.

There were no internal audit procedures whatsoever.  Product was sold each week, and the amount sold was routinely reported as lower than actual sales by the manager.  The manager then claimed to have given away for free all the left over stock, claiming it was for promotional purposes.  Because no reporting is required, no police or other action can be taken, as there are no records kept.

Most charities do not fall into this category, and such instances are usually the result of the greed of one, rather than the greed of the whole organisation. Such instances are becoming more common, and even accepted practice, within the community sector industry.

However, Choice have called for greater accountability and transparency for charities, along with national compulsory guidelines for reporting and disclosure.  It will be interesting to see if the new federal government takes this on board or not.