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We were deeply concerned to see reports of a flawed and misleading analysis of charity spending from the ‘True and Fair Foundation’ reported in the media over the weekend. The NCVO has responded to the inaccurate claims made in the story, and we have also sent letters to a number of media outlets. You can read the response that we sent to the Daily Telegraph below.

“We were disappointed to read your article in today’s paper about the percentage of charitable income spent on good works.  The report is a flawed and simplistic analysis of a number of charities’ annual accounts and indeed a large number of the comments in the article reflect this.

We made several attempts to explain these flaws to the journalist, as did several other charities and the NCVO.  So we were surprised to see the report represented as fact in today’s Telegraph when it is, in fact, utterly misleading.

Cancer Research UK is committed to providing accounts and financial information that is, in the words of Charities Minister Rob Wilson, “as transparent and accountable as possible – so people can make an informed decision about where their money goes”.  CRUK received the award for excellence in reporting in PriceWaterhouseCoopers 2015 Building Public Trust awards – recognition of our commitment to maintain our trusted status with the public.

The report from the True and Fair Foundation does not properly represent the reality of Cancer Research UK’s underlying operating model.  Specifically there are three points that it fails to acknowledge.

Firstly, CRUK has for a number of years been investing in the Francis Crick Institute – a brand new research institute in the heart of London which will help to transform medical research in the UK.  Our total capital investment will be £160m with £41m incurred in 2015.  This investment has not been included in the £423m of charitable activity quoted despite being clearly explained in our accounts.  On its own this would have increased our ratio in the table you quote to 73 per cent.

Secondly, CRUK includes in its annual accounts a clear explanation that shows that for every £1 donated 80p is available to beat cancer.  As with many charities CRUK runs a large retail chain (over 500 stores) that incur significant fixed costs in terms of rent and rates.  These stores allow loyal volunteers to support us with their time and allow the public to support us by donating items that they no longer wish to keep.  We generate over £20m contribution from these stores but, because the economics of these stores are very different to voluntary fundraising, where supporters give us their money, we exclude this income from the calculation of our efficiency.

Thirdly, CRUK as the largest funder of cancer research in the UK seeks to fund research activity that spans many years.  Clinical trials and basic underlying research take time – a clinical trial might take over 10 years to complete.  It is important that the scientists we support have the confidence to know that their research can be funded over the long term.  Following a number of years of successful fundraising CRUK is in a position to increase its annual expenditure which, at £464m, is 34 per cent higher than it was 4 years ago.  Again this is not reflected in the True and Fair Foundation report.

Significant progress towards beating cancer has been made over the last 40 years with survival more than doubling.  Cancer Research UK has been instrumental in much of the progress made and we are grateful to all our supporters for their generosity.  Charities like CRUK, which receive no government money, play a vital role in funding life-saving research and misleading stories such as the one published today risk undermining the trust that we work hard to sustain in all we do.”

Comments

Emma Bagnall February 5, 2016

well without cancer research, the drug my auntie took would not have been available. and we would have lost her three years earlier than we did, so I think your work is amazing, and the papers should get their facts right.

Henry Scowcroft January 19, 2016

Thanks for your comment. We can confirm that we will be hosting a table at the Queen’s birthday celebrations. We plan to invite some of our key fundraisers and volunteers who have worked tirelessly for Cancer Research UK to this event, as a way of thanking them for their incredible dedication, time and effort. We’re really sorry to hear that you’re upset about our contribution towards the table, but this is the cost that is being charged to all the charities that are taking part and is not in our hands.

We want you to know that we’re really grateful for your support for our work. For every £1 donated to Cancer Research UK, 80p is used to beat cancer, and it’s thanks to donations like yours that we’re able to spend millions of pounds every year on life-saving cancer research that has helped double cancer survival rates in recent decades. We will always be honest and transparent about where your money goes – you can read our annual report and accounts for more information.

Mrs M Connell January 17, 2016

We would like to know if you intend spending £1,500 for a table at the Queens birthday party. This table should be given to your organisation for free, in thanks for all the work you do. As pensioners my husband and myself are very upset about this. We only donate £5 per month, but how many months donations will be used up paying for this table. We strongly object to this money being charged to a CHARITY, all of the charities in fact. The Queen is an extremely wealthy woman, this event should be given free for charities, as a thank you, and not for her grandson Peter Phillips to make a large sum of money, out of the goodness of ordinary peoples generosity. We give to several charities, and will seriously consider withdrawing our support from the ones who pay £1,500 for this money making event.

Lauren January 15, 2016

That is a really good ratio. We have to remember that even the cost of water bills, marketing and printer paper play a role in the amazing outcomes of this organisation. I think a lot of people worry that donating $1000 and it going towards a TV ad that generates a further $100,000 is not reaching the cause but you have to understand that is probably one of the most helpful places you can invest in. I’d highly recommend: https://www.ted.com/talks/dan_pallotta_the_way_we_think_about_charity_is_dead_wrong?language=en

Pesh Framjee January 10, 2016

I see the link to my report is not showing up

Cut and paste this link into your web browser

https://www.linkedin.com/pulse/so-true-fair-my-critique-flawed-report-why-cost-ratios-pesh-framjee?trk=mp-author-card

Pesh Framjee January 10, 2016

The so called True and Fair Foundation’s Report is hopelessly flawed. I have carried out a detailed critique of this report and none of the allegations stack up. They made rudimentary and basic errors in their analysis. (if the link does not work then Google ‘Neither True nor Fair’)

In Cancer Research UK’s case they have not understood the impact of trading (See Section 5 of my critique). The charity could immediately achieve the T&F Report’s arbitrary target of charitable send of 65% simply by giving up their charity shops but this would mean that they have a lot less money for their charitable activities. In addition, this flawed report has failed to recognize that investing in a research institute is as much charitable expenditure as making research grants. The numbers used in the report wrongly exclude the many millions invested in the Francis Crick Institute. (See Section 6 of my critique).

More importantly we as donors and supporters of charities need to understand that it is not possible to measure the efficiency and effectiveness of a charity by comparing cost ratios and overhead rates. (See Section 8 of my critique). We should focus on what is being achieved in the important fight against cancer – this is shown in Cancer UK’s annual report and website.

Do not be influenced by this report, it is superficial and has been proven to be hopelessly wrong. The Telegraph that headlined the report has provided a link to my critique as an update at the bottom of their article. Unfortunately, the misleading headline is what the readers see.

Kat Arney January 7, 2016

Hi Mo,
Thanks for a great explanation – you’re right!

Mo Reece January 7, 2016

“Why is it excluded ?”
“You claim that for every £1 donated 80p is available to beat cancer i.e. 80% and yet you can only account for 73% as quoted above .”

The disprepancy is because money generated through shops is not donated. It is money spent in return for goods Surely that’s simple enough to understand? I don’t work for CRUK but it’s pretty obvious to me.
People who give money (as opposed to buying cheap stuff in a charity shop) want to know where their moeny is going, and 80% of it is going to beat cancer.
If you’re getting bargains in a CRUK shop then you’re not donating money to beat cancer- you’re getting a bargain and any profit goes to cancer research. But you’re not a donor, and you can’t expect 80p in the pound to go to research.

It makes perfect sense for any chariity that runs shops to account for donations and sales seperately as it gives donors a clearer sense of where their money goes.

Michelle McClurkin January 5, 2016

We generate over £20m contribution from these stores but, because the economics of these stores are very different to voluntary fundraising, where supporters give us their money, we exclude this income from the calculation of our efficiency)…So on a yearly basis should this not still be included in your balance sheet? Income £20m less rent , rates etc for each shop? Profit and Loss status? Why is it excluded ? If its income it should be included , if its a loss why bother with the shops?

Kat Arney January 4, 2016

Thanks for your comment. There is no guidance from the Charity Commission or Auditors on how this ratio should be calculated. In our accounts we include a clear explanation that shows that for every £1 donated 80p is available to beat cancer. However, as with many charities, we run a large retail chain (over 500 stores across the UK) that incur significant fixed costs in terms of rent and rates. These stores allow loyal volunteers to support us with their time and allow the public to support us by donating items that they no longer wish to keep. We generate over £20m contribution towards our research from these stores but, because the economics of these stores are very different to voluntary fundraising, where supporters give us their money, we exclude this income from the calculation of our efficiency.

C Stride December 30, 2015

Misleading analysis article
You contradict yourself. You claim that for every £1 donated 80p is available to beat cancer i.e. 80% and yet you can only account for 73% as quoted above .
“On its own this would have increased our ratio in the table you quote to 73 per cent.

Secondly, CRUK includes in its annual accounts a clear explanation that shows that for every £1 donated 80p is available to beat cancer.

The general public would understand that in trading i.e charity shops some years a profit is made and some years a loss is made so why not include the cost / income of charity shops and on-line shop (Christmas Cards) in the calculation of the amount of income going direct to charitable purposes.

I will still support you but donating goods to your shops BUT I still think that the voluntary sector has a whole needs to be investigated by the Charity commission.

pauline Howell December 16, 2015

I have longed believed that if the billions that must have been collected by the public alone had really gone into research and not the pockets of the administrator’s and scientists we would have the cure 30 yrs ago ,,they still use the killer Chemo because of the money the drug companies make I am old enough to remember my mother and brother in law being cured of cancer by the hospital Radio machines they both lived another 40 yrs unlike both of my daughters that are dying from Chemo Killer which was first used by the Doctor of Death Menglar in Polish concentration camp, The drug companies are committing mass genocide with the help of docs who write the prescription’s what happened to the Hippocratic oath of First do no harm ? They soon found out how to control aids ,,,,,

Mark Thomas December 15, 2015

I have had a cold caller knock at the house this evening showing me your accreditation is this now part of your fundraising strategy ?