Charitable giving is big business, with many organizations handling millions in revenue. But big charities have come under fire for issues from bad accounting to actually doing more harm than good. In this article, Jonathan Garton looks at the importance of trust.
Many of us regularly donate to charity in order to do good. From rare diseases to cancer research, homelessness, and abused animals, each year in the U.K. we donate around £10 billion (about $13.9 billion) to a diverse range of causes. In the United States, donations are as high as US$358 billion.
But trust in big charity is falling, rocked by stories from aggressive fundraising practices—blamed for the death of a 92-year-old woman—and allegations of mismanagement, to reports of huge cash surpluses and sizeable funds spent on administration. Indeed, research published by the Charities Aid Foundation in September 2015 suggested that public trust in charities had fallen significantly in the past year.
When asked in 2014 whether most charities are trustworthy and act in the public interest 71 percent of over 1,100 people agreed, a figure broadly in line with previous years. In 2015, this had fallen to just 57 percent.
A decline in trust is perhaps unsurprising in light of such negative, high-profile stories. It is important to remember that the majority of the public still consider most charities to be trustworthy, but that doesn’t mean we should be complacent—and we ought to be concerned by any decline in the reputation of the charitable sector.
Any organization that relies on donations generates an information gap between those who fund its activities and those who benefit from them, which makes it difficult for us to judge the extent to which our donations are put to effective use or make an independent assessment of their quality. This information gap can be exacerbated by geographical considerations, as with a charity that provides disaster relief on the other side of the world, and also by time, as when a charity accumulates reserves to spend at some future time. Certain charitable services, such as the provision of education or social welfare, can also be difficult to evaluate meaningfully on anything other than a long-term basis, regardless of whether they are funded by donations or by charging fees.
