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Cost ratios do not turn me on


Charities are “becoming extraordinarily disconnected from their supporters  who do not understand the work they do” said Ian Theodoreson, chair of the Charity Finance Group and chief financial officer of the Church of England, last week.   That’s fighting talk, that is.

Controversial the article may be but that doesn’t make it any less relevant (if not totally right IMHO).  There are cases of poor governance, silo working and less than ideal communications around every sector but this issue is different.  As a sector I believe we could actually be making things worse for ourselves through buying so totally into the philosophies of commercial short-termism and ‘price’ competition.  We talk about pence in the pound going towards the cause and cost ratios instead of the outcomes we’re set up to achieve.

Here’s a hypothetical example to illustrate what I believe is the futility of the argument for ever-increasing soundbite metrics:

  • If I donate to St John Ambulance (SJA) and that donation pays for first aid training that enables the recipient to save a life, what’s the cost ratio for that?
  • How long after my donation should I wait for that life to be saved before I think it has met a hard target?
  • If the person being helped only broke both legs instead of being critically ill, should I feel that my donation isn’t working as hard?
  • And what about when SJA Community First Responders get to me or a member of my family quicker than an NHS ambulance could on one occasion but its the other way around the next time?  Should I cancel my direct debit because of poor performance?

Don't just focus on the short termHow about, for a start, charities stop thinking of each other as competitors seeking to ‘get one over’ on their peers and think more about collaboration than competition (check out a previous blog on the topic).  Limited resources for all mean we should think about working in partnership to get the best returns for our CAUSES.

Secondly, outlaw the publishing of cost ratios unless there is a concrete methodology that every organisation MUST use in the context of outcomes achieved.  That said, there does need to be accountability so in the meantime, how about a public-facing set of agreed ‘effectiveness versus our aims’ metrics that don’t run to dozens of pages of pseudo-regulation and generally uninspiring copy?

Next, could somebody please stop the communications behemoth that is Sports / Comic Relief from continually promoting a ‘100% of donations go to the cause’ message. It’s misleading in terms of the spirit of fundraising, sets an artificial bar for every other charity and this message has a near media monopoly due to the campaign’s relationship with the BBC. He who shouts loudest is potentially damaging other causes’ ability to do great work.

I’m not sure any of this will happen of course but imagine how much more engaged our supporters and society at large will be if, say, the big boys and girls of the charity world decide to pool their resources, influence and communications clout to share some of the above-mentioned realism?

Give the media something positive and relevant to say and generally, they will.



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