How Small is "Small" ?

Update June 2022:
This “Thought” was first published in September 2019.   It has been updated in response to the NCVO’s consultation on establishing a “Small Charities Advisory Panel” to “….ensure that the wider offer for small charities across the sector – from other infrastructure bodies, policymakers and funders – is comprehensive, responsive and coherent, and that the voices of small charities continue to be heard and amplified.”

Referring to charities as "small charities” begs the question: “How small is small? "
"Small" is a comparative adjective.    
Smaller than what?

If you said of a person, or a car, or a box of chocolates, or anything - that they were "small", what would that mean?
In everyday speech that would mean that they were smaller than the norm, the typical, the average, ie: they were smaller than expected for that kind of thing.

In the context of setting up a Small Charities Advisory Panel the NCVO’s definition of “small” is “…less than £1 million”.   But, according to the Charity Commissions current (June 2022) figures, 95% of the ca.142,000 registered charities had incomes of less than £1M - and that excludes the ca.27,000 (16% of all charities) which had incomes of less than £100, presumably because they were either inactive or had registered recently and so not yet submitted their annual return.

Tallest man 1If the vast majority (95%) of charities have incomes less than £1M they are NOT small - they are just "ordinary" - they are the norm.
So they should NOT be called "small charities" at all - they are just "charities" - the normal every-day standard-sized charity.

A person who is 5'10" (1.78m) isn't "small" just because there are a few people who are taller than 7' (2.13m)

If it is necessary to distinguish charities on the basis of their size (ie: in terms of their annual incomes) the comparators reflect BOTH the distinguishing characteristic AND the distribution of charities between the different groups - eg: there could be "charities", "rich charities" and "wealthy charities" (which would also put a better focus on why, and the implication, they need to be identified as different from "ordinary" charities).

If we divide all the 142,000 charities into two equal-sized groups, based on their annual income, and call them "smaller charities" and "larger charities":

  • the ca.71,000 “smaller charities" would have incomes in the range £100 to ca.£20,000 (not £1,000,000 !);
  • and the other ca.71,000 "larger charities" would have incomes in the range £20,000 to £1,000,000,000.

And if we divide all the 142,000 charities into three equal-sized groups and call them "smaller charities", "larger charities" and "wealthy charities":

  • the 48,000 "smaller charities" would have incomes in the range £100 to ca.£8,000
  • the 47,000 "larger charities" would have incomes in the range ca.£8,000 to ca.£55,000
  • And the remaining 47,000 "wealthy charities" would have incomes in the range ca.£55,000 to £1,000,000,000

One might be tempted to say that there could be "slim charities", "fit charities" and "fat charities", but that might be a step too far.

But it does illustrate a rather more subtle, and therefore less obvious, point about the common use of terms like "small" to describe what are actually "normal" charities.

In the charity sector, much of the rules, guidance & support tends to be focused on the running of larger charities - ie: those wealthy enough to be able to employ the professional staff and advisors needed to implement them.
The use of w
ords SmallAndLargelike "small" tend to carry with it a pejorative implication - of being a bit "less good than...", or "inferior to...", the norm.   A classic example of that is the dispensation, granted by the Charity Commission, to allow non-company charities with incomes less than £250K to use Receipts & Payments accounts rather than accruals accounts.   That dispensation is on the grounds that is it "simpler" to implement for the typical non-accountant trustees and/or volunteers or staff of "small" charities.   But R&P accounting is widely regarded (particularly by "professional" accountants) as being an inferior cut-down accounting system, not least because it is not capable of giving a "true and fair view" of the charity's financial situation (overlooking the fact that preparing full "true and fair view" accruals accounts didn't do much to prevent the financial debacle of the collapse of the Kids Company - one of the "fat" charities with an annual income over £1M).

And by the same argument:  has Small Charity Support got its name wrong?
It provides support to the 88% majority of charities with incomes up to £250K - ie: any "small" and "medium" charities plus a fair proportion of "wealthy" charities.
So shouldn't its name be changed to just "Charity Support"?

More importantly
SquarePegRoundHoleWhat is really needed is a major change in the "gold standards" for management, governance and reporting in the charity sector.   Instead of being focused on the needs of the small minority of "wealthy" charities run by teams of full time employed professional management staff, they should be focused on the needs of the majority of "small" and "medium" charities run by groups of unpaid volunteer non-accountant/lawyer trustees in their spare time, perhaps assisted by other volunteers or junior administration staff.
ie: the charity sector's "gold standards" should be explicitly designed to meet efficiently, effectively and economically (and ethically and equitably) the needs of the majority of "small" & "medium" charities.   Any additional standards to meet the needs of the minority of wealthy charities should be extensions or alternatives to those "gold standards".  ie: the volunteer trustees of small and medium charities should no longer be made to struggle trying to  knock the "square pegs" of the charity sector into the "round holes" of commercial financial standards - as it is at present.

Or as Caron Bradshaw, CEO of the Charity Finance Group, is reported as saying:  "...we need to break this long but flawed habit of shoehorning charities into regulation and legislation designed for the for-profit world to avoid the unintended and harmful consequences such an approach brings about for the third sector."