A new guide has been published to dispel “the top 10 myths that abound” about the charity sector.
The guidance from the Institute of Chartered Accountants in England and Wales, published today, covers how charities are run, carry out their work, are funded and staffed, and whether they are liable for tax or their vulnerability to fraud, among other issues.
It claims that the myths need to be dispelled “so public and donor confidence in the sector continues to build”.
The top 10 things that are apparently wrongly believed by some members of the public are:
1. Charities spend too much on fundraising
2. They should not make a surplus or build up cash reserves
3. Too much is spent on highly paid executives
4. They should not undertake commercial activities
5. Charities should be run and staffed [for free] by volunteers
6. Too much is spent on overheads
7. Charities do not pay taxes, so need less money
8. Professional qualifications are needed to become a charity trustee
9. Charities are less vulnerable to fraud than other organisations
10. Charities should not engage in campaigning and political activity.
It also explains why it is important for a range of stakeholders, including donors, to understand not only what charities do, but to shine a light on how they operate, the need for a professional approach and the funding of core activities.
The working group that co-ordinated the guide included charity practitioners from BDO, Crowe and RSM. It was chaired by Pesh Framjee, who has led several not-for-profit teams within accountancy firms.
He said: “There are many negative misconceptions created by the myths that abound about charities.
“As someone who has worked with and for charities for over 35 years, I too often see the negative consequences that impact on charities.
“It is incumbent on all of us who recognise the important work that charities do to actively try to dispel these myths and ensure that the popular narrative focuses on the facts.”
Kristina Kopic, ICAEW head of charity and voluntary sector, said: “People’s goodwill and generosity remain the lifeblood of the sector, but this is at risk if the public misunderstand what charities do and how they operate.
“We hope that by tackling the 10 most common myths about how the voluntary sector operates, we will encourage charity trustees, staff and advisers to be transparent in areas where misconceptions are prevalent.”
ICAEW’s press release alongside the guidance said that, according to the UK Civil Society Almanac 2022, 86 per cent of the sector’s expenditure related to activities directly linked to a charity’s purpose.
It added that trustees must ask whether their charity is making sufficient investments in important infrastructure, including legal and regulatory compliance, management skills and technology.
They “should be able to explain how administration and other related costs will increase efficiency and improve impact, transparency, governance and leadership, to understand where savings or investment could be made”, it said.
The full report, Dispelling Common Myths About Charities, can be read here.