Stop charities running amok with public money

With over 200,000 charities, supported by the taxpayer to the tune of £16bn a year, the current system of financing charities is very silly and very expensive, says Merryn Somerset Webb. It has to end.


There are far too many bad charities

We've written several times before about our worries about the charitable sector.

We don't like the way gift aid allows people to hypothecate their taxes. We aren't sure that the vast amount of money transferred from the taxpayer to the sector via the Treasury offers us much in the way of value. We worry that charities overspend on their own staff and underspend on their causes (charities are the last bastion of the defined-benefit pension, for example). We know that there are too many charities doing similar things, that they refuse to merge, and that this is hideously inefficient.

And finally, it bothers us that charities don't shut down when their aims have been achieved: instead they simply move their stated aims on and keep harvesting cash.

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All in all, we are pretty sure that the UK doesn't need 200,000-plus charities. And we are pretty sure that the taxpayer doesn't need to be supporting them to the tune of £16bn a year.

Anyone not convinced that it is worth worrying about all this should pick up a copy of today's Times. In it, we learn that there are more than 2,000 charities that have the stated aim of helping veterans in one way or another (that's one for every 1,500 or so, and a total worth of around £1.1bn) and that some 300 of those focus on the mental health of ex-soldiers.

We also learn that some of them are awful: they provide ineffective or bogus treatments (they don't have to prove that their treatments meet any specific standards), they "undermine NHS care" and they fail to engage with those in the worst condition (leaving them for the NHS).

But possibly even more irritating that all of that, we learn that the charities may have been sensationalising the extent of the ex-serviceperson mental health problem in order to get in donations. Scamming the government and scamming the public too.

The government has to call a halt to the way the charitable sector is, as one Times interview put it, allowed to "run amok" with public money without having to account for their behaviour in the same way as public bodies.

Either charities should be treated as the extensions of government they clearly are,financed directly (without all the confusion of gift aid and the like) and forced to merge, shut down, cut costs and actually be effective, or all public financing of the should stop.

The current system is both very silly and very expensive. It has to end.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.