This is something we constantly struggle with when trying to evaluate whether a charity is being effective or not.

Renowned neurosurgeon Professor Charlie Teo this week announced he was leaving his own charity. He set up a brain cancer charity in 2003, but has quit as he believes too much money is spent in running the charity than the cause itself.
​​

"The public would object if they knew the CEOs were driving a company car, putting it in company space, travelling first class, doing any travel at all. It is all about volunteerism. It is all about the cause, not the running of the charity itself. There is no reason why these cannot run lean.”

His full comments are available here, but his comments have stirred controversy amongst consultants and people within the sector on linkedin.

Strategy consultant Tully Rosen said "There are many ways to read an NGO's budget. Some will say they spend 100% of donations and pay for their overheads by running a separate for-profit arm. But really, isn't this just the age-old NGO practice of cross-subsidisation? Others cash-in wages and expenses for core staff into operating expenses for program delivery, magically converting it into direct service delivery expenditure. At the end of the day, most annual reports wont give you enough info the easily distinguish between NGO accounting practice. Plenty of work left to do for the ACNC."

Ted Flack, a governance expert added, "Ever since Henry VIII took charity work out of the hands of unpaid monks, unpaid "Trustees" (board members ) have hired paid staff to manage the charitable works. Wise trustees hire the best people at whatever is the going rate. I certainly would not hire second best people at second rate pay to do this vital work".

The Impact Suite recognises not all charities are the same. The Royal Flying Doctors Service would have high operating and administrative costs relative to Movember - which is effectively a digital donation platform.

Teo's points can easily be overcome with good governance principles and procedures, including reporting lines, budgets, and procurement policies (which could easily exclude first class travel for instance).

‍