There is no evidence that charging for services weakens a charity’s perceived legitimacy, a study by the Centre for Social Innovation at Cambridge Judge Business School has found.
The study, “Fee or Free: Should Charities Charge Beneficiaries Fees for Services?”, was prompted by fees for charity services increasing by 45% in real terms between 2007 and 2015 as a way, it suggests of counteracting the fall in philanthropic income experienced following the financial crisis of 2007-08.
Looking into the implications of charging beneficiaries fees for services, it found no significant difference between charities that do so and those that do not, in terms of their quality as charities, mission focus, staff morale, volunteer commitment, or relationship with beneficiaries. Expenditure was found to have the most influence on a charity’s ability to deliver its social goal.
In fact, it found that, contrary to some fears that charging may impact negatively on them, charities that charge for their services strengthen their social mission instead: stating:
“Charities who charge generally have more income, more numerous and diverse sources of income, larger staff numbers, and a larger community of beneficiaries.”
Therefore, it recommends, charities should explore all options available to increase spending on their social mission, including charging beneficiaries’ fees for services where appropriate.
The study was conducted by Flóra Raffai, Chief Executive of vision charity Cam Sight, as her masters thesis for the MSt in Social Innovation degree programme. The research was supervised by Dr Neil Stott, Director of the Centre for Social Innovation at Cambridge Judge.
94 charity accounts were analysed for the study, with incomes ranging from around £32,000 to £117 million, with an average income of about £2.49 million and average expenditure of £2.66 million. The charities ranged in age from four to 225 years, with an average of 94 years. They were selected from umbrella charity Visionary to be representative of UK charities, with data collected through a survey as well as an analysis of their annual accounts.