Judging the KidsCan charity on its administration costs alone misses the point of what charities are created to do... change society for the better

People like to think that our society is proactively generous and compassionate, with everyone actively seeking out causes to support. I for one would be delighted if we lived in a society where money simply fell out of the pockets of the people and into the coffers of charities to support the range of good work they do. It is however, a rather romantic notion. Sadly, the reality is that we don’t live in such a proactively kind and generous society. Most donors give because they are asked – the $2 million that the ‘Big Night In’ telethon raised last weekend in an economy blighted by a recession is testament to that - and fundraisers quickly learn that if you don't ask, you don't get.

For fundraisers, any feelings of euphoria – like that felt by those involved in last weekends’ telethon on Monday morning - are usually mitigated by the overwhelming reality of the issues that their organisation is fundraising to address. The role of charity fundraising is so much more than raising money. While an important means to an end, the end is about changing lives – both those whom the charity supports and those who support the charity.

Where would our society be without charities? And where would charities be without funds? What fundraisers do helps change lives and societies. Charities must never apologise for the part that fundraisers and fundraising plays in bringing about a more just, fairer and compassionate world.

Public trust and confidence in New Zealand charities are vital to their fiscal health. The more that can be done to increase understanding and subsequently trust and confidence, the more sustainable all New Zealand charities are likely to be in the future. That’s easier said than done, however.

We live in a time where charities are no longer untouchable. There are a number of vocal individuals who are highly critical of the way charities raise money and report how they have spent that money. Comments this week by Russell Brown have highlighted why charities must be ever more aware of the need to be accountant and transparent. While public trust and confidence in New Zealand charities is pretty good, Brown’s comments highlight how levels of understanding about how charities operate are not.

Charity workers take for granted their knowledge of the sector; the public just doesn’t have the same understanding. As a result, it’s vital that a fundraising charity is transparent about how much it invests in raising money, how the money is actually raised and how this helps a charity meet its charitable objectives. Thing is, that’s not easy.

The charity that can rely on a thousand volunteers to each raise $5,000 running marathons or sitting in baths of baked beans, for example, is likely to have much lower fundraising costs than a charity that relies on employed fundraisers to ensure their financial sustainability.

Charities are not homogenous and consequently the ways in which they generate their income and deliver their services are not going to be the same. It’s widely accepted in every other commercial venture you need to spend money to make money. Return on investment is always important and ROI on charitable fundraising is no different. Except that with charity work, the return is not the money raised, but the lives changed. And what anyone in the sector will tell you is that it’s not necessarily the charity that spends less of what they raise on administration that makes the biggest difference. Charities are far more complex than that.

Brown is right to ask the questions. What charities should take from this is the need to become better at providing the answers – before they are asked.

Fundraisers have a role in bringing in the money, but charity accountability and transparency is so much more than the way it controls its costs. The benchmarks against which effective charities and effective fundraising should be measured must be about the quality and impact of the work the charity does, the way a charity relates to its beneficiaries and the community, and the relationship that it has with its donors.

Only when a charity is comfortable with the full reflection that it sees in its own mirror, is true accountability and transparency achieved.

Megan Pacey is a New Zealander who's currently chief executive of a UK- wide early childhood education charity. She was previously Director of Policy and Campaigns at the Institute of Fundraising in London .