Do big charities rely on the 80/20 rule?

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Most people involved in business know the 80/20 rule. Named after the Italian economist Vilfredo Pareto, who in the early 1900’s found that 80% of wealth in Italy was owned by 20% of the population.

In the last 100 years this rule has been demonstrated again and again in business (20% of customers represent 80% of sales) and in life (20% of time produces 80% of results) and so on.

And remarkably even in charity. 80% of all income donated by you and me is given to the large and super-large charities. 20% to the rest. (Source: The UK Civil Society Almanac 2017, NCVO).

In other words, the 3.4% largest charities in the UK receive most of the income.

Interestingly, of the 20% who get the balance of income 82% are small (less than £100k/annum) or micro (less than £10k/annum) charities.  They get 5% of the income.

How does this 80/20 rule just happen?

We are not sure it is purposeful, but more of an unconscious bias.

Unconscious bias towards big charities? Brands that we recognise and therefore trust instinctively? Brands we have grown up with? Or that we support because of their celebrity endorsement?

Or because it’s truly difficult to find small, local charities and hand over money with complete trust. (Read our blog on trust).

Or because the time it takes to undertake due diligence on a small charity appears not to be worth the effort for a small donation?

We don’t know. We are just guessing.

We do know and believe strongly that this imbalance is ultimately unfair. The only growth in the charity sector, according to the NCVO, is in those charities that have £100m plus.

We are not knocking them for this. In fact, although the majority of Quartet’s grant giving is to small, local charities we do occasionally reward grants to large charities if they are working on a unique project in our region.

So if you also think it’s unfair, get in touch. If you want the reassurance that your donation will be passed through to a fiscally responsible and well managed small, local charity, call us.

If you fancy challenging the 80/20 rule…Quartet Community Foundation is here to help.

Note: The NCVO figures differ from the Charity Commission (as shown on other reports) as they are quoting a single year. In this case 2016. The Charity Commission figures quoted are one month (as stated) in 2017.