just my type - an archetype analysis of charity finances
TRANSCRIPT
Just my type: understanding charities using archetype analysis
Cian Murphy & Joe SaxtonMarch 2017
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Why do we need financial archetypes?
• We need to explain the sector better and its finances better. • Members of the media and general public will judge charities by
their accounts and produce ratios and metrics based on the whole. • Yet the average of the sector is something that no single charity
represents. Charities have evolved so much that one size definitely no longer fits all - charities are not a monolithic group.
• This analysis tries to drill down to find out what the constituent elements of the charity sector looks like.
• We hope that by identifying ‘types’ of charity we can provide betters ways that boards of trustees can measure their performance and what ‘normal looks like for their type of charity.
• But the analysis is still developing – so we’d love any thoughts or feedback
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What is archetype analysis?
• Archetype analysis is a technique that picks out the most distinctive cases in a dataset and compares all other cases to these.
• Allows us to explore a complex dataset where charities can be partly one type and partly another
• We can then break the dataset into groups based on which archetype they score highest for
• We applied this technique to accounts of 2,000 charities with an income of more than £5m and looked at six archetypes
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What are the six types?
Linked Trusts
Contractors and Service Providers
Fundraisers
Traders
Legacy Fundraisers
Invested Trusts
401
1113
74
255
41
125
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Linked Trusts
Voluntary Income
Legacy Income
Trading Income
Investment Income
Charitable Activities Income
87%
2%
3%
3%
6%
Staff Costs
Voluntary Income Costs
Trading Costs
Investment Costs
Charitable Expendi-ture
16%
3%
2%
1%
92%
2nd Lowest average number of staff (170)
Lowest average high salary (£56,489)
Highest Fundraising ROI (18.95:1)
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Contractors and Service Providers
Voluntary Income
Legacy Income
Trading Income
Investment Income
Charitable Activities Income
9%
1%
4%
2%
85%
Staff Costs
Voluntary Income Costs
Trading Costs
Investment Costs
Charitable Expendi-ture
40%
2%
3%
0%
94%
Highest average number of staff (443)
3rd Highest average high salary (£80,678)
3rd Highest Fundraising ROI (3.07:1)
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Fundraisers
Voluntary Income
Legacy Income
Trading Income
Investment Income
Charitable Activities Income
79%
16%
11%
2%
8%
Staff Costs
Voluntary Income Costs
Trading Costs
Investment Costs
Charitable Expendi-ture
31%
31%
5%
0%
62%
2nd Highest average number of staff (341)
Highest average high salary (£95,055)
3rd Lowest Fundraising ROI (2.93:1)
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Traders
Voluntary Income
Legacy Income
Trading Income
Investment Income
Charitable Activities Income
26%
7%
56%
2%
16%
Staff Costs
Voluntary Income Costs
Trading Costs
Investment Costs
Charitable Expendi-ture
40%
6%
37%
0%
55%
3rd Lowest average number of staff (210)
2nd Highest average high salary (£91,003)
Lowest Fundraising ROI (1.91:1)
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Legacy Fundraisers
Voluntary Income
Legacy Income
Trading Income
Investment Income
Charitable Activities Income
82%
60%
5%
5%
7%
Staff Costs
Voluntary Income Costs
Trading Costs
Investment Costs
Charitable Expendi-ture
33%
11%
4%
3%
75%
3rd Highest average number of staff (270)
2nd Lowest average high salary (£75,635)
2nd Highest Fundraising ROI (5.05:1)
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Invested Trusts
Voluntary Income
Legacy Income
Trading Income
Investment Income
Charitable Activities Income
22%
2%
5%
56%
15%
Staff Costs
Voluntary Income Costs
Trading Costs
Investment Costs
Charitable Expendi-ture
14%
2%
6%
10%
79%
Lowest average number of staff (137)
3rd Lowest average high salary (£75,635)
2nd Lowest Fundraising ROI (2.24:1)
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What does all this mean?• The sector really is a mixture of apples, oranges and bananas so trying to
use fundraising, staff, or expenditure ratios to describe all charities is not helpful.
• Contractors and service providers are by far the largest archetype and have the most staff. Who-ever knew there were so many linked trusts? This is a category of charity that we were barely aware of – but it’s the second largest type.
• So while the public/media sees fundraising charities as the charity world, the sector as a whole is really rather different
• Some familiar faces fall into different categories from the expected, these are often those who have a fundraising minority onto top of a largely contractor majority
• Mixing archetypes is probably the best strategy both in terms of financial resilience and improving overall ratios
• What difference would it make if we analysed small charities in the £1-£5 million size. Are there any other measures we should include in the analysis?
• Fundraising and trading archetypes are inherently expensive financial models. They shouldn’t be compared ratio-wise with predominantly linked trusts or legacy types
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Contact Joe Saxton or Cian Murphy for more information on:[email protected] or [email protected]