Understandability and Transparency of the Financial Statements of ...

None of the above reasons includes any analysis of the charity‟s financial statements. In
fact, further to Lumley‟s reasons is the ultimate view that donors rely on their „heart
strings‟ to choose which charity to support rather than attempting any evaluation of
which is the „best‟ charity to support, as shown by Holm (2009, p. C11) who said “I
have enough faith in people to assume most donations do good.” This view was also
supported by some interviewees:
The ones [charities] that are doing well are more marketing astute and know
that they have to tell a story to gain the best ongoing support from their
stakeholder group. There‟s another big benefit for them as they‟ve got the
ultimate marketing weapon because they‟ve got something which is tugging on
the heartstrings, they‟ve got a good cause. (Interviewee 18 A)
Yes, it comes back to what the desire to support is. Before you reach into your
wallet there‟s got to be an emotive need. People aren‟t that rational and clinical
to say I‟ll look at all these financial statements. (Interviewee 9 BM)
This means that the charity that pulls most of the heart strings gets the most support.
The negative side of this is seen in a book written by Linda Polman entitled „War
Games: The Story of Aid and War in Modern Times‟ (Polman, 2010). In an article
entitled „Kindness kills when aid prolongs war‟ journalist Anthony (2010, p. B10)
reports on an example in Polman‟s book:
It‟s the visual image that sets the news agenda, and the more shocking the
image, the more attention it gains, and the more attention it gains, the more aid
it‟s likely to attract. For example: In Sierra Leone the rebels noted that they only
received coverage from BBC World when [child] amputees emerged from the
jungle.
Anthony (2010, p. B10) considers that when the next appeal comes with images of child
amputees:
Most of us who care will neither look away nor dig a little deeper into the
political background. Instead, we will get out the cheque book. Because while
charity doesn‟t always benefit the intended recipient, it usually manages to make
the donor feel better.
Trevor Garrett, Chief Executive Officer of New Zealand‟s Charities Commission, is
concerned donors aren‟t using their „head‟:
But I do worry that donors don‟t ask „if I‟m giving money to an organisation, is
it actually helping anything? Is it achieving anything?‟ (Radio New Zealand, 27
August 2009)
There is a need to get the balance right between the „emotive‟, i.e. heart, and the head,
including the „financially informed‟ aspects of the donating decision. As relying just on
the heart could mean that any rumour of wrong-doing may tarnish a charity‟s reputation
and lead to donors‟ trust in that charity being broken, even though there may be no
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