Big Charities ‘Hooked’ on State Funding

As much as £3.1billion of funding for Britain’s largest charities comes directly from the public; nearly a quarter of their total income.

In a report into the funding and transparency of the country’s third sector carried out by the Centre for Policy Studies, they also acknowledge the true figure could be as high as £6.5 billion, the Times writes.

It shows a dangerous dependence on state funding and as many as eight charities on the list ‘could be considered quangos, either because they are formal public bodies such as The Arts Council of England or ‘near to government bodies’ sponsored by the public sector.

Registered charities in England and Wales are entitled to preferential tax status on account of the work they do, and the research demonstrates an increasing trend for these agencies to re-register as charities.

But in doing so, the CPS say there needs to be a significant increase in the transparency of their funding sources in order for them to be democratically accountable and in order for tax payers to know where their money is being sent.

They also argue that such information is vital in order for the health of the charitable sector to be assessed.  If large charities are dependent for most of their income on public funds then ultimately they are dependent upon political affairs, they say.

And once a cycle of public financing develops and a private charity has undertaken services paid for by public money for a long time the line, they say, between the public and the private sectors begins to blur.

The Think Tank slams the accounting procedure, saying it is not possible to accurately assess the level of public funding in most major charities in England and Wales.

‘Of the Top 50 highest-income charities, 21 indicate in their annual reports that they receive public money, but it is impossible for the reader to quantify’ they say. ‘There is no consistency in reporting the type of public support received,” adding that there is “a widespread failure to identify the amount.”

On top of money from the UK government, the CPS research reveals that the 49 top charities also receive £195 million from a variety of EU bodies, totalling about 1.5 percent of resources and a further £140 million from foreign governments and international bodies such as the UN.

While these are skewed towards overseas activities – Oxfam and Save the Children both being significant recipients – it is usual for money from such sources to be tied in with political aims.

The author of the study, William Norton, said charities were vulnerable if they became dependent on state money and thus others who supported and contributed money towards them should be aware of this.

“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,” he said.

“Political decisions can change. They are more likely to do so in an environment where the public finances are under pressure. When a charity is dependent on a single source, that potential fragility should be obvious on the face of its accounts.”

His opinion was backed up by Karl Wilding, the director of public policy at the National Council of Voluntary Organisations who said that more information should be available.

He said the “simplest and most efficient way” to do this would be for public sector bodies to publish full details of their spending on such groups but  added that “progress on this has been slow”.

“We believe charities should operate to the highest standards of transparency — but we should remember they are already far more transparent than the private sector, while the government still has more to do to shed light on how it spends money on outsourced public services,” he said.