At the start of the Covid Pandemic one of the highest profile campaigners and fundraisers for the NHS was Captain Tom Moore the centenarian World War II veteran who walked around his garden on his walking frame to raise money for the NHS. Captain Tom by his selfless desire to help others by raising money for what he saw as a good cause attracted hundreds of thousands of pounds of donations from Britons.

Captain Tom is now sadly not with us any more but the charitable foundation that was set up in his name does and one of the writers over at Unherd magazine has uncovered some worrying things about it. The writer, Henry Hill, has been doing some digging into the charity’s finances and it’s really quite shocking.

Mr Hill has discovered that the charity, which has raised at least £1 million pounds last year has spent a worryingly large amount of money on ‘management’ whilst dispersing relatively small amounts to the Captain Tom Foundation’s charitable aims. It appears that the Captain Tom Foundation has spent £160k on ‘management costs’ whilst the amount given in grants is only £160k. According to Mr Hill there were four grants of £40k given out totalling £160k. On the subject of the finances of the Captain Tom Foundation, other sources quoting the Times such as Tim Worstall are stating that the amounts spent on the Foundation’s internal costs is higher at £240k with £125k of that going to ‘consultancy fees’ including in one case to a company owned by Captain Tom’s daughter.

There is also the matter of the amount that the Captain Tom Foundation is holding back as a reserve. Now as someone who has sat on the management board of a small charity I understand that it’s a damned good idea for a charity to have a reserve fund. The reason that having reserves is a good thing for a charity to do is so that the organisation has funds to deal with any unforeseen events or challenges, such as a once in a lifetime pandemic that impacts on a charity’s operations. What’s concerning about the Captain Tom Foundation is that the charity is also sitting on a ‘reserve fund’ of £600k as well as having high management costs and a relatively low level of charitable grants dispersed.

Whilst I am in no way implying that there’s any malfeasance with the Captain Tom Foundation it does seem that they are spending an awful lot of money donated by the public on administration costs. Now some of those costs will be unavoidable ones such as the cost of auditing the finances which any business with a high turnover including charities with the level of income that the Captain Tom Foundation has, but I doubt that would account for more than a small part of the £160k management costs. From looking around at audit costs I very much doubt that the audit cost would be the same as that of the JD Wetherspoons pub chain at £197k and would probably be for this charity considerably less than £40k.

So this charity has given out, according to one source, £160k in grants and spent £160k on admin. So, if these figures are correct, for every one pound that’s gone to whatever projects the Foundation is supporting, another additional pound has gone on admin. That does not count the money that the charity has put into its reserves. I don’t know about you but these sort of figures do not inspire confidence that the charity is being particularly efficient with funds.

There might be, to be fair, reasons for the high management costs. One reason I can see is that this is a relatively new organisation with consequently high management and set up costs due to the staggeringly large amount of money that has been donated. With such high sums of money involved it could be the case that the charity’s management want to be absolutely sure that they are getting the best professional advice that they can buy in order to avoid problems in the future.

It is to be hoped that as the Foundation matures the cost of management may drop somewhat and be less fiscally onerous on the Foundation’s funds, which is something that I would seek to do if I was in the position of running this charity. Unfortunately the precedent for this is not good.

Whilst many British charities, especially small local ones, are pretty lean financially and do not pay out excessive wages to chief executives or have high management expenses, that’s not the case with medium sized and larger charities. According to Third Sector magazine there are at least 60 charities where earnings for top employees are £200k or above.

In some cases such as with the Wellcome Trust the top employee, who is on £4.5M, there is a possible justification for this salary as this person is in charge of the Trust’s investments which is a very responsible, specialist and skilled job. However, such high salaries are less easy to morally justify when the charity is one that relies on public subscription and not the return on investments. Such a charity would be for example the Save The Children organisation that pumps out emotionally manipulative advertisements extolling people, often people on lower middle to low incomes, to give to help sick and vulnerable children. Save The Children’s chief executive is on £230k and there are 429 employees who are on more than £60k per annum. I must admit that it leaves a pretty bad taste in the mouth to think that these salaries are being supported and funded by people who give to Save The Children because they believe that most of the money being given will be used to support vulnerable children.

Whilst the financial goings on at the Captain Tom Foundation have and will continue to raise eyebrows, it is not alone in having high management costs. This is a problem throughout the charity sector. Having high management costs and a large number of highly paid staff would be less of a moral issue for a commercial company that produced a physical product as the market would decide whether such costs were bearable and justifiable. However it’s much more of a moral issue when it comes to charities where you have large numbers of highly paid staff who are in place primarily because the public donate to these charities because they believe that the money that they give is primarily going to go to the objects of the charity and not into the chief executive’s pocket.