Where does charity money go?

Charity spending can prove a source of controversy. In the past few years, we’ve seen several high-profile charities face criticism and regulatory intervention for inappropriate spending, with some gracing front pages of newspapers. Hannah Ingram-Moore, who set up The Captain Tom Foundation in mid-2020, has faced accusations of personally benefiting from charitable activities. An inquiry in 2024 found that Naomi Campbell had used Fashion for Relief funds to pay for lavish five-star hotels, spa treatments, cigarettes, and room service. Indeed, in August 2025, the charity co-founded by Prince Harry faces questions over funding and expenditure, among other issues.

 

The above all feature high-profile people. But plenty of other charities have misspent funds under less watchful eyes. Spending that does not align with a charity mission diminishes trust among the public. Lower trust means fewer donations, which means charities struggle to serve their communities. That’s why financial transparency, visibility, and accountability are so important: they reassure donors that money is going to the right place.

 

But tracking spending can be complicated and aligning spend with missions is not as clean cut as we might imagine. Here we deep dive into sector-wide spending, the obstacles that prevent financial transparency, how digital can increase financial visibility, and so much more. 

 

So, without further ado, let’s begin.

 

 

Charity spending and the importance of trust

 

Trust in charities has remained consistent since the pandemic, according to government statistics. Trust in 2018 stood at around 5.5 out of 10, a low level that drew criticism at the time. But that number grew to 6.2 in 2020 and 6.4 in 2021, showing that trust in the sector grew significantly during COVID-19. Charities shone through the pandemic. They onboarded remote systems and continued to provide services despite the stress and the strain. And some high-profile fundraisers, perhaps most famously Captain Tom, gave the public a sense of hope when hope was in high demand. It is perhaps unsurprising that trust in charities grew.

 

Trust in the sector has gone up and down since 2022, but reached 6.5 out of 10 in 2025. Trust in charities ranks high compared to other organisations, with only trust in doctors ranking higher – 7.1 out of 10, compared to 6.5. A helpful comparison, in terms of instilling trust, can be found in the overall trust directed at government ministers: ranking at just 3.5 out of 10. That shows that the public, despite the high-profile cases, still largely trust charities and charity workers.

 

But it shows, too, that charities still have a way to go in ensuring that trust. And perhaps the greatest way of instilling trust is providing complete transparency around your finances.

 

 

A (flawed) examination of charity expenditure

 

In 2024, according to the Charity Commission, 170,755 registered charities in England and Wales had a total income of £99.6bn and expenditure of £99.06bn. The NCVO Almanac provides a vital insight into how that money is spent. But the results remain frustratingly vague.

 

The Almanac shows that in 2022, for example, the vast majority of charity money (80%) was spent on “charitable activities”. That seems a welcome development, until you start to unpack the vast array of spending that “charitable activities” covers: overheads, research and development, compensation, travel, and other expenses. Grants issued by charities to other charities or organisations represented £6.6bn (10%) of the spend and the costs of generating funds, including expenses relating to fundraising efforts, were £6.3bn (10%).

 

The Charity Commission asks for granular detail for each charity, but assigns similarly broad definitions in reporting, capturing charity spending under charitable activities, raising funds, and governance. Annual reports are available for the public to read but tend to differ in detail, and they have not been accumulated to give a sense of how the sector generally spends money. And annual reports are not always useful, with references like “Project costs” often featuring, with little granularity in terms of project spending. Even annual reports can seem vague.

 

The available statistics are useful, but the definition of “charitable activities” feels too broad, accounting for so much of what a charity does, a lot of which feels divorced from actual service delivery. We cannot meaningfully decipher how much the sector spends on overheads vs service delivery, for example, as both seem incorporated under the same classification.

 

 

The problem of financial transparency

 

That’s a problem – one that creates further problems. Consider CEO pay in the sector, a controversial topic that hits the limelight every few years. Critics claim charities spend too much on top salaries, minimising spend on frontline services. But CEO salaries and frontline services are both subsumed under “charitable activities” in reports. A charity can claim, as many do, that they spend 50p of every £1 on service delivery and they will look impressive, on paper at least. But that amount may include extortionate CEO salaries, marketing campaigns, unused overheads, unnecessary tech, an army of ping pong tables, tickets to conferences and more conferences, and so on. Little of that 50p may directly reach service users.

 

The problem is that we do not have an intricate sector-wide understanding of spending, which would instil greater trust in charities and, importantly, hold charities to account. Perhaps the larger problem is that, even with efforts to secure a more intricate sector-wide analysis, we might find the efforts fall short, because it’s difficult to delineate between general spending and spending on frontline services. We’d all presumably agree, for example, that carer salaries count towards direct spend on service delivery. But how about their managers? And how about their manager’s managers? Donors want to see as much of their money going to service users, but making sure that money reaches service users requires a lot of spending elsewhere.

 

 

The pursuit of financial transparency

 

That’s why many charities create transparency. You’ll find, especially with large charities, web pages that tell donors how their money is spent. The British Red Cross provide a good example, showing the overarching spend, as well as more detail on the percentage of spend on different areas of service delivery. Oxfam similarly breaks down the spending further by showing how donations are split between emergency response, campaigning, support costs, and so on.

 

Save the Children provide detail on the areas of spend – such as emergencies, education, health, nutrition, and so on – as well as other areas such as trading and raising funds. They go further with a grants list, accountability statements, and information that covers employee pay, which provides transparency to donors. Many other charities follow the same route, sharing additional details with donors, so they know their money is going to the right place.

 

Larger charities will likely find financial transparency easier to achieve. For smaller charities, such a focus on financial reporting, especially at a granular level, would likely be difficult to achieve. And, ironically, time spent on such reporting would take time away from service users. Financial transparency is easier for charities with finance teams. But all charities, regardless of size, should make some efforts to create transparency where possible.

 

Accountability and transparency breed trust. And a trusting public is a generous public, feeling safe in the knowledge that their money will support the charity mission. Donors, much like funders, want impact. Funnelling as much money as possible to service delivery – and detailing that fact clearly and openly – allows charities to raise more money from the public.

 

These efforts still raise questions, as the granularity remains unclear. But the further charities go to explain their finances, openly and honestly, the more donors will be willing to donate. Fintech platforms like Sage or AccountsIQ can help, particularly with reporting, allowing charities to show intricacy around spending. One advantage of fintech is data visualisation, as the platforms can create accessible visuals showing donors how money is spent.

 

 

High-tech and high financial visibility

 

Perhaps the best way to boost visibility is with high tech. Blockchain is one option that many charities have already adopted. Using Blockchain, donors can receive real-time updates on the progress of projects and the impact of donations. The decentralised nature of Blockchain makes it difficult for fraudulent activities to occur and provides transparency around expenditure. In essence, it allows donors to track any gifts. Digital financial platforms, such as Alice, solve transparency issues by directly introducing Blockchain into the charity sector.

 

Based on the Ethereum Blockchain Network, users can track payments made to a charity and set conditions around how their money may be spent. And, importantly, users can pull back donations if charities do not meet the conditions. Charities, such as St Mungo’s, have used the Alice platform to improve donations services. St Mungo’s used Alice to help lift 15 people out of long-term rough sleeping by delivering personalised support – boosting transparency and meeting donor needs. Alice froze donations until the charity provided evidence that money was spent on defined goals. Donors were also able to track when the suggested goals were met. 

 

The tech is evolving, and uptake remains low, but organisations are pioneering novel solutions that help donors better track their donations. The Giving Block and Giveth both leverage the power of Blockchain and specialise in accepting assets and cryptocurrencies. The benefit to charities is the promise, demonstrated in real-time, that money will be spent on impact. The benefit for donors is witnessing, in real-time, that their donation goes directly to service users.

 

 

Find out more

 

Our 2025 Reimagining Service Delivery Summit unlocked new perspectives on service delivery and how charities can maximise value to service users. Click here to watch the session recordings for free.

 

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