The Weird World Of Charity

4 months ago Ricardo Hylton 0

This is part two in a four part series on foreign aid and the charity sector to be published over the next four weeks. Read Part one on foreign aid here

 

Charity: (n) the voluntary giving of help, typically in the form of money, to those in need.

Breast Cancer. Starving Ethiopians. Abused Animals. Climate Change. Human rights. Drug Addiction. Deaf Sport. These are just a tiny fraction of the causes that the modern world of charity seeks to remedy. At first glance, charity as defined in the dictionary seems a wonderful thing: ‘voluntarily giving help to those in need.’ What’s not to love, right?

Many taxpayers would be genuinely shocked if they knew that hundreds of millions of pounds of aid money was going to private consultants in the UK rather than to alleviate the conditions of poverty faced by vulnerable communities in the developing world.

Charity, as commonly understood, changes lives. In this inequitable, capitalist, neoliberal world, the forgottenOliver Twists’ subsisting on nothing are thankful for any gruel these charitable organisations are able to serve up. But the invisible aliens aren’t convinced the proliferation of the charity sector in modern, wealthy societies should be welcomed.

Stories abound in the press about charities. Many are critical. The stories most memorable are those focused on financial scandals, governance or data failings and where the high profile casualties don’t do much to change the tone of the conversation. But the invisible aliens aren’t interested in anecdotes about bad things here or there. In this article we take a macro view on the very existence of charities and whether or not their very presence says something sinister about the nature of humanity.

 

Charities Are Big Business…And They Act Like It

There was a time was when charitable organisations were modest affairs. Many of the earliest charities to help the neediest in society. This was normally the poor – especially orphans and widows and the sick or disabled. Help would be provided in the form of shelter, food, clothing and caring for the sick. Charitable organizations often took the form of hospitals, orphanages and poor houses. Little old ladies selling flags from cardboard trays on street corners, that sort of thing. Images of a gentle, caring Mother Theresa come to mind. They were often based on churches and other religious groups. They concentrated on homely issues like the protection of children and animals. Not any more. These days, charities are big business, and they ape the worst excesses of big business.

They boast highly-paid bosses, ­celebrity champions, royal patronage, fancy offices, large staffs and shops on every high street. They spend millions on emotive TV advertising to rake in the money. No charity is complete without an American-style chief executive officer, whose exotic six-figure salary is justified by the specious argument that “we have to recruit and retain the best talent”.

The change from what went before happened because we have more disposable income, and where there is spare cash there is always somebody anxious to get their greedy dabs on it. Charities are no exception.

This invisible alien gave money to the British Red Cross and I never heard the end of it. Letters, phone calls to my home, constant appeals to give more. And that is low-level stuff by comparison with the high-pressure salesmanship that goes on.

Charity chiefs are going too far. They set up a lucrative market in information-swapping, selling on our personal details to rival charities and other businesses.

Some of them have a fine disregard for who they sell to – so crooks and scam merchants get access to the life savings of vulnerable givers.

The result is one scandal after another. One 87-year-old man suffering from dementia lost £35,000 to a tsunami of demands after his details were passed on to more than 200 competing charities and some outright criminals.

The RSPCA has been caught sizing up ­potential legacies from donors. This isn’t charity. It is sharp practice – old-fashioned capitalism, profiteering from the good intentions of people with a conscience.

The charities industry has an annual turnover running into billions of pounds. It is regulated – if that’s the right word – by the Charity Commisson , which has a remit to ensure corruption-free conduct.
Given that there are around 160,000 charities in England and Wales, with thousands more being created all the time, it’s not surprising that its performance is weak. And equally unsurprising that charity chiefs have exploited this weakness to maximise their income.

Meanwhile, always remember to tick the box that says “Don’t pass on my personal details to others”. It won’t end the dodgy market in data trading, but it’s a start.

 

Financially Illogical

Some of the country’s biggest charities have been branded an ‘utter disgrace’ after a new report claimed one in five spend less than half of their income on good causes. The report alleges that 1,020 voluntary organisations – with a combined annual income of £6billion – spend half or less of their cash on good work, including the British Heart Foundation and Age UK.

Nearly 300 spend just 10% – and The Lloyd’s Register Foundation uses only 1% of the money, according to the explosive document. Many charities disputed the figures in the report deeming them ‘totally misleading.’

Looking at the 5,543 charities which raised more than £500,000 last year, it claimed that one in five spent less than 50% of their donations on good work, and that 292 charities spent 10% or less on charitable activities. This is truly remarkable.

 

Aid or Profiteering: Large Salaries in the Charity Sector

At a time when many people have seen their pay cut, theirs went up by 25% in the last year. For some, it doubled. A number of them get paid over a million pounds a year. No, we are not talking about bankers. We are talking about people helping to dispense aid to developing countries. They work for the Department for International Development (DFID). This department has paid out nearly half a billion pounds of British taxpayers’ money to “consultants”. One company alone received more than £37 million to “promote free markets and reform of governance” in Third World countries.

The profiteering by those who have created an industry out of the suffering of the world’s poorest is truly scandalous. Recent claims of aid waste include the dumping of billions in World Bank trust funds to meet spending targets as well as huge sums for blogs by consultants and excessive expenses claims.

Billions of pounds of funds from Britain’s overseas aid budget intended for the world’s poor are spent on western consultants, an investigation revealed. Another analysis showed that DFID consultancy spending doubled to £1bn ($1.26bn) a year since 2012, with British companies overcharging across the sector.

Not only is DFID the best-paying Government department, it is one of only three of the 19 to recruit staff, taking on 430 since 2010 – an increase of 27%. Staff in total cost taxpayers £23million a year – enough to provide six million meals on wheels to the country’s elderly and vulnerable. It has the highest salary in the British Civil Service.

There has been a lot of drama about how UK aid money is spent. It has been fantastically lucrative for a group of primarily British consultants, several of whom take home six- or seven-figure salaries and are former civil servants.

But the real question is why, more than 10 years after the government’s commitment to ‘untie’ British aid and open up contracts to developing country firms, so much of DFID money is still going to UK companies?

For developing countries, ‘untied’ aid should offer local companies a larger share of aid-funded business, bringing the promise of new taxes, jobs, and the development of local manufacturing and expertise. ‘Buy local’ campaigners argue that it is hard to imagine aid “exit strategies” if most money effectively stays in the donor country, with little entering local economies.

But data compiled by the Guardian shows that the vast majority of DFID’s contracts are going to companies based in the UK and that the share going to UK firms seems to have risen in recent years. Of the 117 major DFID contracts and procurement agreements (together worth nearly £750m) published on the government’s contracts portal since January 2011, only nine include non-UK firms among the grantees. An Indian company, Kran Consulting, is the only firm from a developing country on the list to win a full contract.

There’s a longstanding image, peddled by both left and right, of UK aid as a direct transfer of income from British taxpayers to poor people overseas. Perhaps this is what Justine Greening had in mind when, upon taking over from Andrew Mitchell as development secretary, she allegedly exclaimed: “I didn’t come into politics to distribute money to people in the third world!”

But a close look reveals a labyrinthine list of intermediaries. Many of the larger chunks of UK aid spending are channeled through big multilateral organizations and British firms.

One UK think tank charged £10,306 ($13,000) to write a single blog post and two consultants were each paid £12,000 ($15,000) to produce a six page paper on disaster resilience. In 2014, DFID paid £26,000 to hire Krishnan Guru-Murthy, the Channel 4 News presenter, and £14,000 to hire BBC broadcaster Zeinab Badawi to moderate sessions at a two-day aid conference in Mexico.

The inquiry was launched after it emerged that Adam Smith International received over £450m ($562.1m) since 2011 and operates in countries such as Syria and Libya, and was also found to “unduly influence” MPs by creating fake letters of appreciation to garner support for the work it was allegedly carrying out.

More than two-thirds of £25.4 million spent on a foreign aid scheme to install wells, water pumps and irrigation in some of Africa’s poorest areas was soaked up by fat cat British consultants.

 

Human Nature?

Most people will be shocked to discover that dispensing charity, which used to be thought of as an activity that should be done for no personal reward, is now a way to get rich. Perhaps we should not blame the “consultants” for doing their best to get their hands on a share of the largesse that DFID is committed to handing out – although it is a depressing comment on the motives of those who work in the sector that making as much money as possible out of helping others should have come to dominate.

 

I’m conditioned brother. Even my condition has been conditioned…

But what does that say about humanity? Those inhabiting the wealthiest corner of the globe, whose vocation or calling is to dispense charity to those in need, still adopts the Gordon Gekko greed is good mentality. Are we conditioned by capitalism to seek profit or is that human nature (assuming there is such a thing as human nature). Why do we, like the squirrel hoarding nuts or those lost boys in William Golding’s Lord of the Flies, always seek to accumulate rather than disseminate?

There was outrage and shock when the first Wall Street film was released in 1987. The film’s famous definition of wealth as being not “$450,000 a year, but rich enough to have your own jet” was pure bull-market speak.

When Gekko, in his electrifying speech, said, “The point is, ladies and gentlemen, is greed is good, Greed is right, Greed works,” there a collective intake of air. What was shocking about the first Wall Street was how close it came to being a wildlife documentary, with the director bringing us rare footage of the strange new beasts now stalking Gotham City.

The second Wall Street in 2010 fell flat in comparison, and that’s because that culture of greed is no longer novel or outrageous; it’s almost prosaic. Put another way, Gekko was once a monster; now he’s practically the norm. What was once evil is now merely banal. Gordon Gekko has abandoned the Square Mile in London and Wall Street in New York. He now stalks the corridors of our most famous charities. Human nature or societal conditioning, I’ll let you decide.

 

When Doing Good Means You’re Doing Bad. The other side…

Want to know a sure way to be seen as immoral, unethical and unlikable? Raise $1 million for charity. Want to know how to have people think a lot more favorably of you? Raise nothing at all. If you think that’s entirely irrational, you’re right. Welcome to the human condition.


The key to being thought of as a louse for helping the sick or the poor is not the act of giving by itself, but the act of benefiting from it. That million dollars looks a little less princely if, for your troubles, you kept 10% of it—even if you made that intention clear from the start and even if $900,000 still went to the folks who need it most. Fork it all over or don’t expect any applause.
The idea that a good act doesn’t count if the actor benefits as well is known as “tainted altruism,” and it not only makes little sense, it can also cause real harm, as professors of organizational behavior George Newman and Daylain Cain of Yale University prove in a prominent study. But there are ways around the problem, the investigators show, ones that reflect a subtler understanding of just what morality is—and which may help boost charitable giving too.

Newman and Cain cite the cautionary tale of Daniel Pallotta, former head of a for-profit company that raised money for AIDS research and other causes, and over the course nine years, generated a whopping $305 million in donations. As head of the company, he earned $400,000 per year. That fact was not widely known, but once it was made public, he was hit with a storm of criticism and his company went out of business. In a 2008 article in the New York Times titled, “The Sin of Doing Good Deeds,” columnist Nicholas Kristof reported that revenues from a single charitable fundraiser dropped from $71 million when Pallotta was in charge to just $11 million after. So who’s immoral now—Pallotta or his critics?

 

A Conglomerate of Thieves

 But what is DFID doing paying such large sums to “consultants?” It is particularly galling to discover that most of those concerned turn out to be American and British, firms or academic institutions: so British and American taxpayers are not merely handing out aid worth millions of pounds to developing countries, they are getting representatives from the richest nations on earth to help deliver it. Was it really impossible to find Sierra Leonean experts who could advise on the best ways to support “the electoral cycle in Sierra Leone”? DFID recently handed a group based in Washington £3.6 million for that purpose.

So the next time the peddlers of charity approach you on the high street with tales of suffering and request your bank details, wonder aloud how much of the money you give is going to the charitable cause and how much is going to the pockets of the financiers who now populate the industry. Because make no mistake about it, this is an industry. A profitable one.

 

Way Too Big For Your Boots

Charity is big business and just like the financial side of the corporate world, there are sharks and guppies. The largesse has been unequally distributed.

You can think of this as the nonprofit sector’s inequality problem. The rich get richer: Well-established, brand-name organizations see spikes in donations, especially during crises. Smaller groups, including those that are deemed to be more effective than their better-known peers, and especially those serving the extreme poor, are left to muddle along.

The upshot is that charitable giving doesn’t do nearly as much good as it could.

It is difficult, if not impossible, for donors to know which charities have the most impact, pound for pound, so they are drawn to the familiar. Scale begets scale, as big-name groups with long histories, hefty budgets, and sophisticated fundraising operations dominate the charity world. This is true regardless of the nonprofit’s focus: civil liberties, medical research, domestic poverty, international poverty, and so on.

Year after year, old favorites like the Red Cross, British Heart Foundation, and the Salvation Army tops the recipients of charity in the UK.  The American Red Cross in the united States raised more than $600 million in 2015, despite being pilloried for its inept responses to Hurricane Sandy and the 2010 Haitian earthquake.

Giving to the largest nonprofits outpaces overall giving. The Chronicle of Philanthropy (in America) crunched the numbers of its 400 big charities, and found that their donations grew by more than 7% from 2014 to 2015. Giving to all charities, meanwhile, was up only 4%, according to the Giving USA report. The 400 large organizations collect more than $1 of every $4 raised for charity in America.

 

It’s Better To Give money To A Beggar

All this makes one sceptical about charitable giving. How much of it goes on salaries to overpaid executives? How much on further fundraising? How much on advertising, newsletters and public relations? And how much on the cause one would like to support? These are questions that one cannot help asking oneself, even though one will never know the answers.

One is usually advised to be wary of giving money to beggars; better to entrust it to a reputable organisation that will spend it wisely on the people that most need it. But the invisible aliens remain to be convinced. Charities realise that it’s more normal in human nature to want to give to an individual than to an amorphous entity, which is why they advertise with, say, a harrowing photograph of a starving child. The person then feels that it’s that specific child he is helping when he gives the charity money. Safer still to give money directly to the person who will benefit from it, even at the risk of being ripped off. You know the beggar may be a fraud, but you also at least know that he will be genuinely grateful.