Can everything that counts be counted?

February 2008

The process of preparing annual accounts inevitably raises questions about progress in any organisation.

Analysis on how things have improved on the previous year – whether on costs, outputs or impact - along with a review of the five-year plan receive particular business attention at year-end. Charities are no exception.

According to CaritasData, almost 30 per cent of non profit organisations have calendar year-ends, and many will now be engaged in the accounts preparation process, a particularly intense time for governing boards, executives and their auditors.

We saw last month how the top 20 charities saw some impressive growth rates of their funds between 2001 to 2006 (see Cathy Pharoah's article 'The myth of the big players' in Caritas, issue 2, January 2008), and the use of key performance indicators was helpfully explained in Nigels Scott's article, 'Financial stewardship' in the same issue.

Benchmarking tools such as Fundratios, the various data services and SROI (see the news item 'OTS calls for SROI evaluation reports' in this issue) are another opportunity to monitor ‘progress’, whatever that may be. But of course, in this sector, as Albert Einstein once put it ‘not everything that can be counted counts, and not everything that counts can be counted’.

The publication of the Charity Commission’s long awaited public benefit guidance (see the news item 'Charity Commission clarifies rules on public benefit' and Jonathan Burchfield's article 'Public benefit?' in this issue) adds more to the workload of governing bodies and executives to formally demonstrate what benefits are being provided. While it cannot be disputed that transparency of what charities are doing with supporters’ money is absolutely crucial, there is a danger that an over-zealous approach to outputs that ‘can be counted’ will risk marginalising the less tangible but equally important social impacts achieved by the sector.

The great thing about projects is that they have a definition about them. The ability to say ‘we did that – that one ours’ and point to an outcome for all to see on the organisation’s website is very comforting and does much to sustain donor engagement. David Nussbaum highlights how utterly different campaigning work can be in his First Person interview in this issue: ‘But when you are seeking to influence business leaders, or government legislation, it’s hard to know what would have happened if we hadn’t done what we did’. The charity SIR was designed by the Charity Commission to allow flexibility in reporting outcomes, but charities continue to be criticised for poor performance reporting. It will be a very bleak day for the sector if compliance requirements end up stifling the voices of the lobbyists and campaigners because tangible outcomes are not immediately identifiable or annually countable.

Author: Clarissa Dann

Clarissa Dann was the editor of Caritas as well as an HR and management online service,he People Bulletin until July 2011.

She is now the editor of the specialist trade finance magazine, Trade and Forfaiting Review which can be viewed at www.tfreview.com but does write on charity finance and investment from time to time.

Clarissa has a background in legal and professional publishing, as well as business journalism and holds an MBA from Cass Business School. She has been one of the judges for the non-profit category of the Chartered Institute of Marketing's Excellence in Marketing Awards for the second year running.

She has also acted as clerk to the trustees of a small almshouses charity and as a member nominated trustee to a pension scheme of a multinational publishing company.

Click here for other articles written by Clarissa Dann

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Editorial

Can everything that counts be counted?

Author: Clarissa Dann