A review of my latest book in MoneyWeek magazine

After yesterday’s slightly graphic blog, I thought I’d lighten up today and blow my own trumpet by posting a review of my latest book THE GREAT CHARITY SCANDAL which appeared in MoneyWeek magazine.

Remember, although THE GREAT CHARITY SCANDAL is only available as an ‘ebook’, you can go here  http://www.amazon.co.uk/gp/feature.html?docId=1000425503 and download the ‘Kindle reading app’ free of charge onto any device – computer, PC, laptop, smartphone or whatever. Also, the book is quite short – 28,000 words compared to 65,000 words for a normal paperback, so it’s quite a quick read.

Anyway, here’s the MoneyWeek review.

Our charities aren’t working

There isn’t that long to go until Christmas. That means I’m already getting buried in a pile of invitations to charity shopping mornings. I love these. I love almost everything to do with Christmas. I love all the handmade crafty stuff and the luxury stuff that you buy at these events. And I love the social aspect of shopping among a group of friends.

But there’s one aspect of the whole thing I am not so sure about – the charitable aspect.

Many people will have seen stories in the press about salaries at the larger charities. Jasmine Whitbread, the chief executive of Save the Children, appears to be being paid £234,000 a year. And she is only one of 20 employees at the charity making more than £100,000 year.  This isn’t unusual. The head of Marie Stopes International gets £290,000, for example.

You might think this is perfectly reasonable – after all, charities need talent as much as big companies, and talent costs money. But I wonder how much else you know about the charities sector as a whole. I suspect everyone should read a new book from David Craig: The Great Charity Scandal. It is not, as he is at pains to point out, an attack on charity itself (this is definitely a good thing). It is an attack on the UK’s charitable system which has allowed not far off 200,000 charities employing more than a million people and spending some £80bn every year.

What are the main charges against them?

First, massive duplication and inefficiency. What’s the point in having Breakthrough Breast Cancer, Breast Cancer Care and the Breast Cancer Campaign if they all have to prepare their own accounts and have their own very expensive bureaucracies? Why aren’t they forced to merge? And why are there at least four charities (and possibly more – I got bored of looking them up) devoted to red squirrels?

Second, the fact that so little of what they raise goes towards actual charitable expenses. I know of some charities who spend more keeping their final salary pension schemes (these are still bizarrely common in charity land) on the road than on their advertised activities. The pay problem is becoming increasingly common, too.

And third, what we think of as charitable activities are not the same as what many charities think of as charitable activities. Far too many of our big charities spend significant percentages of the cash we give them on political campaigning – think Oxfam (which spent more than £20m on this last year), the RSPCA and the RSPB – rather than helping the poor and sick (which, surely, is the point?).

None of this would particularly matter if the charitable sector was funded entirely by the post-tax income of private individuals. But it isn’t. According to Craig, 27,000 British charities are reliant on the government for three-quarters of their income.

And all charities are reliant on the taxpayer one way or another. We (and the EU) give them direct subsidies (£137m to Save the Children last year, says Craig). We give them tax relief on all their income from donations and investment returns, and capital gains tax relief too. And of course, we give them Gift Aid.

I’ve written about this before but every time you tick the Gift Aid box, the Treasury has to dig deep to reallocate tax (to the tune of around £1bn a year) already paid into its coffers to your favoured charity: at the margin, the money flows out of the hands of our struggling NHS.

Worse, the state has no control over the activities of these tax-revenue receiving organisations: they get our money and can do more or less what they like with it.

The key point is this: there are too many charities being at least part financed by the state which are not and should not be on the taxpayer’s priority list. We need to pay for the basics of good government before we pay for anything else.

So if we must have tax relief for charities at all (and I am not sure we should) it is, as I said last year, time to distinguish between what is a charity that fits into the brief of the state and is hence a tax-revenue deserving charity, and what is not.

Soup kitchens? Yes. Cancer research? Mostly. Macmillan Cancer Support? Yup. Literary festivals? No. Opera? No. Theatre? No.

You get the idea. If you are in any doubt, read Craig’s book.