The True and Fair Foundation on charity shops

The WI charity shop

I took the picture below earlier this evening. It’s the Women’s Institute charity shop on my high street, where I’ve bought any number of things, though as yet not jam. More of this in a moment.

Lifting the Lid

Earlier today NCVO was asked to comment on a new report from the True and Fair Foundation, ‘Lifting the Lid’, published on the Civil Society website. It’s also reported on the Daily Telegraph website.

The last report, A Hornet’s Nest, was the worst piece of analysis that I’ve read in 20 years of researching and writing about charities. I wrote about it here. This report comes a close second. It’s that bad.

The True and Fair Foundation’s last report was comprehensively pulled apart by leading charity accountant Pesh Framjee in a detailed critique (PDF, 679KB). It’s a lengthy read, so to summarise, as he puts it in his introduction:

The report fails to understand how charities report financial information and tries to make superficial analysis appear to be well considered. Unfortunately, this ‘work’ has been given an aura of credibility by a number of UK newspapers. The somewhat worrying aspect is that so much of what I read, written by various commentators, so-called researchers and in some newspapers about charities – an area I know a fair amount about – is so wrong that it worries me that what I read in the areas I know little or nothing about may also be so wrong.

Telling the lie

Lifting the Lid gets full marks for continuity. This is another embarrassingly poor report. It is fundamentally flawed in terms of its method and analysis, the use of inappropriate comparisons and, an old favourite here, the use of incorrect statistics and facts. A better name might be Telling the Lie. I could write a long blog post pointing out all of the factual errors. Kirsty Weakley at Civil Society news has written a good summary of some of the key problems. A more over-arching point seems more important: for authors that can’t even add up, or get basic facts right, their conclusions should not be taken seriously.

As it happens, their conclusions are a nonsense: my favourite is the accusation that some charities are spending too much on governance. The authors would also appear to have little or no understanding as to how Gift Aid works. No credible policy-maker could possibly take this report or its recommendations seriously. Implementing its proposals would lead to the closure of thousands of the small charities the Foundation claims to care about.

What can we do?

Last time, we tried talking (PDF, 166KB) to the True and Fair Foundation about the problems with their report. They didn’t want to listen and I’m not inclined to spend my time going through this with them again. We also tried explaining to journalists that it was completely misleading. We’re glad that the Telegraph, albeit belatedly, recognised the errors in the report, and following a discussion mediated by Ipso, made significant changes to their article and published a correction. 

When faced by this sort of nonsense all the time – what’s the best way of dealing with it? A good start would be to add your own comments below the article on the Daily Telegraph website. For those who use Twitter, I’m @karlwilding, and more than happy to share your examples of the difference that charities make.

If you’re like me, friends and relatives might read this article and ask you questions (nice people read newspapers other than The Guardian). I’d suggest that there are two conversation starters: the first is that charities exist to benefit the public, not to make a profit. It’s why charity shops don’t make much bigger profit margins than high street chains, a complaint in the current report. And secondly, charities make a real difference to this country. Every day. From cradle to grave. We would be worse off without them.

And for the avoidance of doubt: all sensible charities welcome rational scrutiny of what they do and how they do it. We should all welcome the challenge of answering why and how we make a difference. The tragedy of another socially useless report from the True and Fair Foundation is that biased, erroneous ‘scrutiny’ just makes it harder to promote the goals of transparency and the ability of organisations to fail forward.

Coda: my local charity shop

The Women’s Institute charity shop is an important part of my local landscape and one of the things that made me think this place has got that magical ingredient, community. I don’t know how much profit it makes, but I do know that profit will be spent on benefiting the public, not on personal gain. According to the True and Fair Foundation, shops such as this are a problem: they’re inefficient, because they don’t make as much profit as Next. But then I wouldn’t have got a homemade kitchen apron from a high street retailer for the price I paid. Or the fantastic welcome to the village when I moved here.

They’re also a problem because they’re apparently costing the taxpayer money by swallowing up tax reliefs. Under the True and Fair Foundation’s vision, the Women’s Institute charity shop is a bad thing, just as the WI coffee shop in my local hospital was apparently inferior to the high street coffee chain that was brought in to replace it. And under the proposals in this report, the WI shop would have its business rate relief reduced, and therefore its tax bill increased, which I’m guessing may make the viability of the shop questionable.

So here’s my question for the True and Fair Foundation: why will closing this shop make my community a better place?