Large charities criticised for covering up extent of government funding
Charities have been accused of a lack of transparency after the UK's top 50 organisations were accused of covering up £3.4 billion of government funding in a new report.
The controversial claim comes in the report Charity Begins at Home by the Centre for Fiscal Studies, a prominent think tank, which says 24% of these charities’ combined income, £3.1bn, is directly attributed to public funding but lack of clarity in some areas means that it could be 49%, or £6.5bn.
Income is being concealed because, in some cases, these charities receive so much tax payers’ cash it make them look like a branch of government.
As such, some organisations that are registered as charities are really state-run quangos in disguise, the report said.
It said eight of the top 50 charities are really public bodies, including the Arts Council, the Big Local Trust which distributes National Lottery good cause money, the British Council which promotes British culture around the world, and organisations running academy schools.
We saw in the financial crisis what happens when a sector’s accounting practices obscure the underlying robustness of its sources of income
“Under the current accounting requirements it is not possible to accurately assess the level of public funding of most major charities in England and Wales,” the report says.
The report says the charities are able to do this because of the way they compile their annual reports.
And while the new accounting standard, Sorp 2015, applies for annual reports being compiled from this month onwards, the report says it is unlikely to solve the issue.
Author of the report, William Norton, said that taxpayers should know when charities rely on their money rather than the generosity of donors.
He said that when charities hide the sources of their income they are as much at risk as the banks whose profits came from obscure loan packages before the financial collapse of 2007 and 2008.
‘If large charities are dependent for most of their income on public funds then ultimately they are dependent upon someone having made a political decision in their favour,’ Norton said.
‘Political decisions can change. They are more likely to do so in an environment where the public finances are under considerable pressure.
"We saw in the financial crisis what happens when a sector’s accounting practices obscure the underlying robustness of its sources of income.”
However Karl Wilding, director of public policy at NCVO, said charities were being scapegoated.
"We agree that there should be more information available to the public on how the government spends its money. The simplest and most efficient way to achieve this is for public sector bodies to publish full details of their spending on outsourced services from private companies and charities.”
He added: “We believe charities should operate to the highest standards of transparency – but we should remember they are already far more transparent in these terms than the private sector, while the government still has more to do to shed light on how it spends money on outsourced public services.”
