What Makes A Charity Good? #GoodCharity

Why do we need charities?

Charities are groups of concerned citizens working together on some of the biggest issues in our world today, from children’s welfare to disability rights and from hunger to climate change, and much more. Charities perform a vital function on behalf of all of us.

Shouldn’t the state be providing these services?

Nobody should be forced to depend on charity for the services and supports they need to live with dignity. However, charities often step into the breach where public services are either unavailable or inadequate. Charities also undertake activities that the state is unlikely to ever get involved in, such as providing tea dances for isolated older people or rehoming lost pets. Many charities are very effective and efficient at delivering certain services, which is why the state often funds charities to deliver them.

Why are there so many charities in Ireland?

There are only as many charities as people are willing to set up and support. It is one of the strengths of a democratic society that people can come together in this way to work for good causes. We value diversity in our media, retail sector and political parties: why not in our charity sector?

Ireland’s charity numbers, per head of population, are in fact quite low when compared to other countries.

There are nearly 9,000 organisations on the Register of Charities. Over 8,000 organisations receive charitable tax exemption (CHY) from Revenue. Irish charities range from tiny, volunteer-run community groups to major international relief agencies.

Why don’t charities just merge?

It is true that many charities do the same sorts of things. That doesn’t necessarily mean they should be consolidated. For example, most people would agree that all local areas deserve their own community centres, playgroups and sport clubs.

Organisations working at national or international level may be tackling seemingly similar issues, but it is often the case that they concentrate on a specifc element of those problems. For instance, there is a big difference between undertaking research on a particular medical condition and caring for people with that condition: each requires a very different approach and expertise.

Many charities already work closely together on certain initiatives. Sometimes, it makes sense for them to merge officially and this certainly happens from time to time. However, mergers can be complex and costly and may not necessarily result in the efficiencies and financial savings that might be expected.

Why do many charities pay their workers?

More than half of all Irish charities have no paid staff at all. Volunteers, who give their time freely, are critically important to Ireland’s charities. All charitable organisations are governed by unpaid board members.

However, it is simply not possible for every charity to be run by people in their spare time. Many modern charities are busy, complex organisations that need to employ skilled and experienced staff. Just like any other sector in our society, these people need to be paid appropriately for the work that they do.

Are charity CEO salaries too high?

Organisations that are tackling some of society most challenging problems – such as finding cures for diseases, lowering suicide rates, or fixing homelessness – need the best leaders they can find. Some charities have a national or international remit and employ hundreds of staff working in multiple locations. In order to attract and retain suitably qualified CEOs, charities need to pay salaries that are sufficient, relative to the size and impact of the organisation. The charity’s board must determine the CEO compensation package and must ensure that it is fully transparent about its remuneration levels.

Is it true that not all of the money that is raised goes to the charity?

If a charity is fundraising then it must make sure all the money that is raised is used for its charitable activity. If it does not do this, it is acting illegally. However, this does not mean that all the money raised is given directly to the charity’s beneficiaries. There are very few charities that hand out cash to the people they are set up to serve. Most of the help that charities give comes in the form of some sort of service (think therapies, helplines, accommodation, childcare, etc.). Such services require resources like staff, buildings, transport, equipment and fundraising, which all have associated costs. Without these vital supports the charity couldn’t exist.

What should a charity spend on overheads and administration?

100% of a charity’s income should be spent on achieving its goals.

What then, is an overhead or an administration cost? Is it administrative staff, fundraising costs, electricity, stationery, computers or bank charges? These and other costs are all likely to be key to the organisation’s ability to do its work, and do it well. There is no standard approach to defining overhead, so when one charity claims to spend 2% on administration costs and another states it spends 20%, they are not necessarily talking about the same thing.

Even if a charity seems to be more efficient because it has low overheads, this tells you nothing about its effectiveness. You may find that organisations with higher overheads also produce better results. We therefore urge you to ignore these meaningless statistics and focus on the impact of the charity.

Do good charities spend money on marketing and advertising?

Spending money on anything other than frontline services may at first glance seem undesirable, but some charities spend money on advertising and marketing for two very good reasons.

The first is to raise awareness about the cause (how else would people find out about it?).

The second is to raise much-needed money for that cause, which will allow it to provide more and better services.

If in doubt, contact the charity’s representatives and ask them why they have chosen to spend their money in this manner, whether the return on investment is good, and what they have achieved as a result.

Where can I find out more about a specific charity’s finances?

Finances alone are not sufficient to indicate how good a charity is. Nevertheless, it is important that a charity has well-managed finances and that it is transparent about all of its income, expenditure and reserves. Good charities publish their annual accounts and/or other financial information on their websites. Alternatively, you can contact the charity by telephone or in writing. Any charity should be able to provide you with information on its finances, or explain why that information is not available. You should also be able to access this information for free at Benefacts.ie. If the organisation is a company limited by guarantee, you could also obtain a copy of its audited accounts from the Companies Registration Office (for a small fee). Some charities may also have adopted the SORP (Statement of Recommended Practice) for their financial accounting and reporting.

What do the various numbers charities have mean?

Charities may have various registration numbers, which can be very confusing! The most important of these is the Registered Charity Number issued by the Charities Regulator. Most charities also have charitable tax exemption, approved by Revenue, and they have a CHY number for that purpose. Depending on their legal structure, charities may also have a Company Number or Register of Friendly Societies number. Finally, the Benefacts database, which includes all ‘civil society’ organisations, not just charities, allocates a unique identification number to all entries.

How can I tell a good charity from a fake charity?

Ireland does not have a significant problem with bogus charities. However, as in any walk of life, there are people ready to take advantage, so it is important to be vigilant of the credentials of the charity you are considering donating to. This is especially true when it comes to textile collections and some on-street or door-to-door fundraising. Here are a few tell-tale signs to spot bogus charities:

It does not have a valid CHY number or Registered Charity Number.
It does not share its registered business address on promotional and fundraising materials.
It does not have a valid phone number.
It does not have a website.
It makes vague statements as to its purpose (for example: “for Africa”, “helping orphans” or “for cancer”).

Do not part with your donation if you have any doubts.

Are charities regulated in Ireland?

Yes. In February 2009, the Charities Act was passed. The Charities Regulatory Authority was finally established in October 2014. Since April 2016, all charitable organisations in Ireland must have sought inclusion on the Register of Charities.

Charities have to comply with many other laws and regulations. Depending on their legal structure and activities, they have to meet specific requirements set down by Revenue, the Companies Registration Office, the Data Protection Commissioner, the Standards in Public Office Commission, the Health and Safety Authority, local authorities and others.

Where can I complain about a charity?

If you are unhappy about the way a charity has represented or handled itself, your first port of call should be the charity itself. If you are still not satisfied after your initial contact with the charity, ask for a copy of its complaints policy and follow the procedures outlined in that document. Depending on the nature of your concern, you may also need to inform other parties, for example, An Garda Síochána, the Charities Regulatory Authority, or the Data Protection Commissioner.

Should charities lobby?

Provided that they are doing it to further their charitable goals, charities can indeed lobby law-makers and policy-makers. Some would argue that this is a fundamental role of charities.

Many charities are set up to provide a united voice for those who may otherwise find it difficult to have their voice heard, such as patients, people with disabilities, people who find themselves homeless, victims of abuse or other crimes, etc. Or they may be formed to advocate for causes, such as animals or the environment, where there is no voice.

If a charity does engage in lobbying it must adhere to strict regulations set out by government.

Is ‘charity’ an acceptable word?

Many people feel that the word charity is no longer useful to describe what it is they do and is therefore best avoided. They might use alternatives such as community group, voluntary organisation, social enterprise, nonprofit, NGO (Non-Governmental Organisation), or something else.

What Makes A Charity Good?

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