A Charitable Cause: Charity and Your Business

They touch our hearts, and reach out to us for our hard earned money; some are more than worthy; some are not. How can we decipher which to invest our money in? SBT investigates what makes a good charity in order to make you, the businessmen and women more aware of occurs on and under the surface.

After the exposure of Kid’s Company this year, many questions have arisen in business people’s minds. The first is simply personal, humane and practical: what happens to all the money I give, and do charities actually help the cause they claim to? The other question relates to the extensive grants that the government give to these charities. Either way, it begs the question: how can we make sure we invest in the right charity?

So what makes a good charity to invest in? Each of us has a cause close to our hearts; one that’s affected us, or our loved ones, or just one that overall seems the best for everyone. There are many charities out there who use this fact almost as leverage: we’ve all been there, walking down the street only to be met with someone in an oversized, colourful t-shirt with a money bucket jingling in their hands, tempting you in. You know nothing of this charity, or even if it is a legitimate charity, yet you feel an overwhelming sense of responsibility, even guilt, when faced with the choice of putting those coins in that bucket, or walking away. Morally, why wouldn’t you give money? Practically, why would you if you know nothing of where it’s going? This applies to all charitable practices, just as it would apply in business.

As a business, it may seem safer, and also more personally important to invest in the local community: with a charity that you know, that you trust, and one which you can see the consequences of giving your money to.

The Starr Trust is a local family run charity based in Hove, Sussex that supports young people aged 10 –18 to fulfil their potential in sports, arts & education. Rob Starr, the Chairman of the Starr Trust comments: “If a business gives money to a local charity such as ours then they can feel much more a part of the amazing results that they have helped to achieve. A local charity can (and should) also give back to the business; the Starr Trust believe wholeheartedly that giving back to those who support us is so very important; it should be a two way street every time. Also supporting the City or Town you live in feels right doesn’t it; giving something back to your neighbourhood just feels right. I am not sure if supporting a charity in another country would achieve the same thing. However giving money to a charity in another Country can achieve amazing things; firstly the money can go so much further if for instance it was to a country in the developing world. Also, surely as human beings we cannot help but respond to crises in other countries; charity is, after all about people and not geography.”

Rockinghorse is a Brighton-based charity that has been supporting children for nearly 50 years. The CEO of Rockinghorse, Ryan Heal commented on giving locally, and whether it’s more beneficial to Sussex businesses: “As a donor, I think it’s a case of ‘better the devil you know’ when it comes to charity support. Keep it local and you will find you can have a greater connection to the cause you are supporting. That’s how our supporters at Rockinghorse feel as we are a local charity with a focused cause and through our delivered projects at The Royal Alexandra Children’s Hospital and Trevor Mann Baby Unit in Brighton, our supporters always see where their money goes and that’s key for us in the current market.”

People often feel that they’d rather see exactly where their money goes – something that makes a lot of sense in every walk of life. You wouldn’t spend money on a product that never makes it to your door and still be happy. However, as Rob Starr points out, giving internationally can provide amazing things, and Ginny Simpson, Operations Director at SafePoint, an international charity that aims to use information to solve basic healthcare problems agrees: “International aid is just as important as giving back to local projects, evaluating the impact of both is equally essential to ensure that a donation has improved something or someone’s life. An impact on giving, unless you are directly involved with the charity or project you give money to is very hard to gauge, therefore you have to trust results reported by the charity. Government figures show annually that DFID meet their aid-spending target of 0.7 per cent of GDP each year the impact of which we see the success reported by NGO’s on a daily basis.”

Charity Watch UK has argued often that some charities are so large that they should be treated as businesses and, just like any business, money (profits) must be made. The high profits of a charity, and hefty pay that charity owners and managers often gain is a topic that’s been long under discussion. We expect all charities and trustees to ensure that all charitable funds are used according to their charity’s purposes and in the way that the public would expect. As with any business, staff must be paid, but do these large sums of money gained by those high up in the food chain within charities come under this expectation?

It was recently revealed that nine executives at Cancer Research UK earn more than the Prime Minister, including Chief Executive Harpal Kumar, who pockets up to £240,000 a year. Peter Wanless, CEO of the NSPCC, earns a staggering £162,000 per year – £40,000 more than his predecessor Andrew Flanagan. Amnesty International’s Secretary General earns up to £210,000, and Tom Wright, Group Chief Executive of Age UK, earns up to £190,000 a year.

To most, this seems like a moral outrage: how can a charity afford such wages, and if they can, why is it not going to the cause instead?

After wondering what was happening behind closed doors, and asking whether the public was being led astray or misinformed, Rob responded: “I personally would never want to be paid for my position in the charity. Would I like to see this change for our staff? Well, certainly I strive continuously as the chairman to fund others to match me in what I can put in to the charity and if I am successful in this then I would certainly like to see our amazing staff paid correctly for the work that they do. In terms of the worth of someone, that is down to the individual and their job role. Is it worth paying someone a hefty sum if they bring in twice that amount in donations; I would suggest it most certainly is. Is it worth paying someone a hefty sum if they save lives; I would suggest it most certainly is.  Is it worth paying someone a hefty sum if they bring in half the amount you pay them, or do not accomplish what you need them to; I would suggest it most certainly is not! As I have said before, a charity should be run like a business in many ways and a business would not pay more for a sales person than the amount of income they generate and they would not retain their chief executive if the business is not being successful. If the employee can justify to the charity their worth beyond their remuneration then the position is correct, if they can’t then it is not.”

Ginny Simpsons adds a poignant comment on behalf of SafePoint on the topic of pay within charity: “If morality is confused with frugality, the bigger picture is being missed. Therefore you need to assess what is the size of the pie allocated to overheads verses the enormity of the global problem that is being solved.”

With every new case, the threat to the reputation of charity organisations wavers. Suspicion has been quickly rising after the Kid’s Company scandal, and many other misconducts have lead to a large distrust in the charitable sector, especially for small businesses who choose to invest a proportion of their profit in large international, national or local charities. Scotia Aid Sierra Leone, a £1 million charity was recently probed after The Sunday Post revealed it to be paying only a fraction of its income to the impoverished people it claims to help, revealing that just 13p of every £1 donated goes to the cause, equating to only £137,000 of the £1m. Three of the charity’s bosses paid themselves £313,000 from the charity’s coffers, using shell companies to minimise their tax bill.

Ginny Simpson commented: “Every day you read about another issue with either the ethics or mismanagement within a charity. But equally, every day you read about concerns with corruption in government or in the private sector. Therefore it doesn’t matter what industry or sector you are in as open communication is paramount to ensure that we stamp out corruption of any kind and work on solving global problems transparently.”

When asked directly, SafePoint didn’t quote what percentage of the money given goes directly to the cause, however online sources indicate an 85% charitable spend. The Starr Trust has always been open with its finances, explaining this openness is the key to a good and trustworthy charity, and aims to give as much as possible directly to the cause. But it’s not as easy as it sounds: “During the first 6 years of our charity we gave out 100%. However that has become unsustainable to us now as we do a lot of fundraising through events and the events can be very costly. What we therefore do is cost our events to include all the costs, be it staff, food, entertainment etc and then the net profit from the event can be given out. All the running costs of the Starr Trust remain paid by my business; office space, phones, IT, marketing etc, however we have written into our constitution that we can use 10% of any funds raised to go towards running costs.”

Rob adds fervently: “My desire and aspiration will always to be giving out 100% of what we raise; that is how we started the charity and how I would love to see it. In truth if we look at how much we have raised in the 7 years compared to how much we have given out I would suggest we have given out much more than the 100%.”

Rob defines what he thinks of as a good charity: “A good charity is one which follows its core mission, is willing and happy to open its books and systems to others, is honest with itself as to what it wants to achieve, engages openly with both its supporters and those it supports and above all strives to do good.”

As such, he welcomes investigation within his and every charity: “We certainly welcome both the public and the charities commission to look at us and test us, we have been transparent and an open book from day one and will always be so – we believe to our core that transparency and honesty is key.  Would others agree? I guess the honest ones would and the dishonest ones wouldn’t!” says Rob.

Without fail, all the charities I have spoken to on the back of this article have noted transparency and trust as the best way of assessing a charity’s ‘do-good’ quality – Ginny at SafePoint said: “Innovation and transparency, along with creating a change for people and being able to prove you have made that change is very important. So results and evidence of the impact a charity has had are very good ways to assess if a charity is good/trustworthy.”

Despite the growing suspicion, and good reason for it, Ginny added: “Investors shouldn’t be worried, but they need to completely support and believe the cause they invest in. Do research on the charity, meet the Founder / CEO and allow them to take you through first hand what the charity does and the current projects they have running.”

Questioning where the proceeds go within these charities, and even investigating them thoroughly isn’t a step too far towards paranoia. In fact, these questions – like with all businesses – need to be raised in order to sort the good from the bad. Why would a charity hide something from the public? The obvious answer is, they have something to hide. This is why I went on this small mission of my own, to gather honest answers from charity owners to bring to SBT readers. Although Ginny herself said, “SafePoint use investments wisely and have a wealth of knowledge across the whole platform of the global problem of syringe re-use,” I took her own advice and researched Marc Koska, SafePoint CEO.

Marc Koska founded SafePoint Trust in November 2006, explaining the reason: “The motivation behind the charity was to create a holistic approach to solve the 9^th biggest killer in the world – syringe re-use and to eliminate the spread of blood-borne diseases through this transmission route. Each year, 17 billion injections are given around the world, more than 7 billion of which are unsafe. The transmission of hepatitis B and C and HIV are particularly common: in Africa, for example, 20 million medical injections contaminated with blood from HIV patients are administered each year.”

This is an admirable motivation, and Marc has clearly uncovered a viable solution to an incredibly damaging cause of serious illnesses such as HIV. He managed to change people’s behaviour through public safety campaigns, and their perception of syringe safety, leading one of the largest ever public health campaigns in India, which ended in mandatory use of auto-disable syringes in all governmental and, therefore also all private hospitals.

I had my own questions to ask Marc though after wondering where SafePoint gets its syringes for charitable purposes? The answer was, from Marc’s other business venture, Star Syringe: “Marc invented the K1, an AD (Auto Disable) syringe approved by the World Health Organisation, and founded Star Syringe Limited in 1996, this business is a licensing business with 13 manufacturers. Marc is no longer a director of Star Syringe, however he is still one of the main shareholders,” says Ginny.

She adds: “SafePoint advocates the use of all AD syringes under the WHO ‘Smart’ syringe banner, and doesn’t normally get involved in the supply of syringes, but runs behaviour change / public safety campaigns and creates global policy change to stop unsafe injection practices.”

This leads to another moral dilemma within this discussion: if charity is business, does it matter that huge profits are made under its name if it’s doing such good work for people in need? Where’s the cut off point between good and bad? Marc Koska and his team, are benefiting millions of people, preventing their likely death due to HIV or Hepatitis B and C transmitted through used syringes; he is also, arguably gaining a lot himself, as the main shareholder in the company providing the solution. This begs the question: does it matter?

Many national and international charity events are, in their nature, fuelled by PR. We, as people, are taken in by the media, and encouraged to give to a charity more by seeing a famous face, or hearing that well known celebrity advocate the cause – and do they gain in return? Sometimes. Does that make it wrong? Most would say no, and quite rightly so.

Rob Starr commented: “Charities are no different to businesses; certainly their reason for existence may be different, but the running of them is very similar – they are after all run by people and it is people and not business (or charities) who are corrupt.”

We must certainly keep this in mind when choosing a charity to invest in. Although it’s more important to look at the end cause than at the middle men, and women gaining in between, it’s difficult to overlook when the management of these charities are so directly linked to how our money gets spent. Treating charity as a business is where the answer lies – perhaps a change needs to be made in the definition of a charity, and indeed in the way they should be run.