The Charities Advisory Trust – Killing a UK market in decline
We have just posted a short note on our blog about the amount of donations we make to charity from the sale of our charity Christmas cards. I went out of my way to be transparent because I am aware of the travesty made last year by the Charities Advisory Trust when they named CCA Occasions as their “scrooge of the year”, or whatever they call it. Why is it a travesty?
Are CCA Occasions really Scrooges?
I would say definitely, no! Why am I defending a company that is a competitor of mine? Partly because I think it was deeply unfair and partly because I am concerned that the witch hunt (by which I mean the Charities Advisory Trust’s annual scrooge awards) hurts the UK personalised Christmas card industry and so hurts charities at the same time. So what’s my problem, well…………
- The sums used to derive the Trust’s figures were deeply misleading. They picked the most expensive per card price they possibly could by choosing the minimum number of cards, from the most luxurious card and then added all manner of extras to the cost. I would like to bet that CCA did not receive a single order in the last five years that looked anything like the nonsense example that the Trust used in their figures. So, I suspect that, their 1.1% figure is not a donation that was ever actually made from a real order.
- CCA Occasions have donated literally millions to charity over the years up to and including this year. Well, okay if they are a very profitable company using charity logos to sell cards, then that is only fair, right? So are they doing this from their vast profits? No, in fact if you check their UK accounts for the last five years you will see they have made losses for years. They went into administration prior to this and were rescued by a US firm that is currently bankrolling them. So, they are hardly the proverbial “fat cats”.
- The Trust calculates donations as a percentage of the retail price of the cards. Why? Well, I don’t know to be honest it seems totally ludicrous to me. A company like CCA sells very high end personalised Christmas cards which are naturally more expensive to produce than the off-the-shelf cards from Tesco. However the Trust chooses to describe them as scrooges simply because their donations as smaller as a percentage of the retail price. If I were a charity I would much rather receive £10 from CCA than £1 from a supermarket no matter how many cards they sold to make that donation. Equally if CCA halves it’s prices, it is no more generous is it (and often does, actually – much to my annoyance)? Measuring “generosity” as a percentage of the retail price is a nonsense.
You can’t simply compare the amount being donated to charity as a straight % of the retail price and draw up a table of the “good” versus the “bad”. Yet, the Trust chooses to do this every year and damage, quite arbitrary, a companies business using just such a tool. Helpful for charities, I suspect not. Good publicity for the otherwise unheard of Trust, yes definitely. In fact, in their 2011 annual accounts, they quote “widespread media coverage” of their scrooge awards, which indicates to me that this is possibly the primary intention of them.
The problem is that historically I believe these awards have served a purpose and when they were first conceived I can imagine that they did help to bolster contributions to charities. However the industry in personalised cards has contracted, profits are slim or non-existent (as the Trust well knows – see below) and so now all the awards do is demonstrate how out of touch the Trust is. The “awards” are now nothing more than a cheap publicity stunt. I would suggest that the Trust would be better served understanding the true economics of the industry and working with those involved rather than throwing stones from the outside.
What are the aims of the Charities Advisory Trust
Despite my dislike for the actions of the Trust I suspect their intentions are nothing other than 100% good. I am quite sure that they are driven by the desire to serve charities and ensure they get the best deal possible from commercial transactions. However I am increasingly concerned that the way they approach their aims, in particular with regards to their scrooge awards, is hurting everyone, companies and charities alike. Let me explain…..
From the latest scrooge awards, I have picked these excerpts:
- “This year 41.6% of the cards surveyed were produced in China (Note 2). This makes the card cheaper to produce, but costs jobs in the UK. It is extraordinary that UK charities do not make any effort to see that cards are printed in the UK, thus protecting jobs and the environment.”
OK, I agree. It would be great if consumers supported UK manufacturing. I question whether it is really a charities place to require this but the intention is good. I am definitely “pro” UK manufacturing (well I would be, wouldn’t I!). However a lot of companies are printing in China (not CCA, as far as I am aware) to reduce costs, so that they can make a profit. So which does the Trust want, more profitable companies that can support higher charity donations or less profitable companies that print in the UK, but can’t support the donations being hoodwinked out of them. I suspect you can’t have both, so please don’t rubbish charities for not asking for the moon on a stick! They are clearly more realistic in their aspirations than the Trust.
Referring specifically to online companies (such as ours), their comments were even more alarming:
- “Many publishers give a flat rate amount – 10p or 5p a card, but they had so many extras for printing logos, greetings, colour printing, etc that the total cost was high, and the percentage to charity very low.”
- “It was virtually impossible to work out how much, as a percentage, went to charity, unless you had an A-level in arithmetic and a lot of spare time.”
- “More than two thirds (67.5%) of the online card publishers surveyed give less than 5% to charity.”
- “It was clear card publishers offered charity cards to help market their product. The word ‘exploitation’ comes to mind.”
Answering each of these in turn:
Yes, most online companies do offer a fixed 10p per card donation. Why, because it is simple. Simple to communicate and simple to calculate. It also means that any discounts, specials and other price reductions offered by the retailer do not interfere with the amount donated to charity – which would feel a bit uncomfortable for most retailers I suspect. The fixed 10p donation is not because they are in some way inherently evil, it is just practical. Also why should the donation be a % of the retail price? I can’t see any compelling logic for this at all. Perhaps the Trust could provide me with some sort of reasoned explanation as to why this is the most reasonable way to structure a donation? Please, no comparisons to meat pies (read the Scrooge Awards).
Yes, pricing can be complex. Why, because we want to offer options and some cost more than others. We try to make it as simple as possible and believe me simple always means more sales because confused people leave websites pretty damn quick. I can’t comment on whether it is too complex to work this out because I do have an A-Level in Mathematics and so consequently, I do understand it. But again, the tone suggests that this complexity is in some way a deliberate barrier to hide the donation amount. Utter nonsense, most companies want total simplicity and transparency because that inspires trust.
Yes, I can believe that “More than two thirds (67.5%) of the online card publishers surveyed give less than 5% to charity” because they offer a fixed amount of 10p per card and their cards are bespoke and therefore more expensive than off the shelf cards. I am struggling to find a point in this – but again this hinges on why a % is the “right way” to determine whether a donation is generous or not. Seemingly the Trust is married to this idea, although I fail to see why.
Yes, personalised card manufacturers do offer a charity donation to help market their cards. However, the key word is “help”. The charity donation is not the number one consideration for a lot of our customers. It is a “nice to have” and it has become the market norm, so everyone does it. However the presumption that the use of a charity logo is the reason these cards sell is wrong. If you are a business and want to buy top quality personalised Christmas cards then they happen to be charity cards, because that is the way that the market has developed. Equally if the amount given to charity was important in the minds of consumers of these cards then all of us online companies would be competing on this front. We would be seeking to make the largest donation possible because it would be beneficial for us. We know it is not, because people are not asking for it. The charity donation is a “nice to have” and not the “deal breaker” that the Trust’s arguments are often hinged upon. I would also suggest that “exploitation” is not the word that springs to mind, it is actually “partnership” unless you are looking for headline grabbing copy of course!
Misguided or Hypocritical
OK, so you get the point that I don’t totally see eye to eye with the Charities Advisory Trust. However perhaps, despite going about things in a way I don’t agree with, they are simply misguided. Perhaps, they just assume that the whole industry is stinking rich and simply exploiting charities. In fact, the Charities Advisory Trust run their own Christmas card business to help charities. It is not run for profit, they give their proceeds to charity. Very honourable, nothing wrong with that, it is to be applauded.
So do they donate a percentage of their retail price to charity? Well not quite. In fact they donate their “profits” to charity. So if they are not profitable do the charities get nil? I’m not sure, I suspect not, to be fair. In fact the 2011 accounts suggest that they made a donation to charity but their trading profit was very small. It looked to me (please someone, correct me if I am wrong) like the donation was funded from its reserves. However if CCA decided to to pay a percentage of their “profits” to charity then they would not have to donate a penny because they have made trading losses. However CCA choose to be more generous and so donate 10p per card to charity (irrespective of whether they make a profit or not). Remember, where that got them – oh yes, the Scrooges!
So given how profitable the Trust must believe the industry to be (after all it would be shocking and irresponsible to demand greater charity payments if they know the companies are making losses), is the Trust’s Christmas card business doing well. No, in fact their latest set of accounts (to June 2011) was pretty downbeat about the whole market. I quote:
“For 30 years the Trust has produced and marketed charity Christmas cards, generating millions of pounds for charity. The decline in card sending seems to us inexorable. The high cost of postage, the unreliability of the post, the ease of sending e-cards or, for the young, text messages, the availability of very cheap cards, produced in the far east, all contribute to the decline.”, it goes on…..
“In economically buoyant times people buy an average of 30 cards. In lean times this reduces to 20. They also choose smaller, cheaper cards (which impacted on Card Aid and sales were down).”
So, the Trust knows that the market is in decline, recognises that the cards of companies like ours and CCA are being replaced by cheaper version from overseas and has suffered the same loss of revenue as the industry as a whole. They also manufacture in the UK, so they are also hit by these cheaper imported cards. So what are their plans for the future:
“Strive to maintain Card Aid [the Trust’s Christmas card business], in a falling market, as a service to charities.”
So despite the Trust knowing that the market is in decline, appreciating fully that selling cards is not highly profitable and that they are uncertain whether they can retain their Christmas card business without making losses (it looks like they might have run it at a loss last year) they think it is appropriate to name commercial companies as “Scrooges”. It is that that bothers me the most. They know companies are struggling (because they are struggling themselves) and yet despite that knowledge they quite vindictively attack a company such as CCA Occasions describing them publicly as scrooges.
Finally it seems you can only be included in the scrooge awards if you donate to charity. So if you produce low cost cards and choose to donate nothing to charity, then you are home and dry. “Scrooge! Me?” , “No, I simply don’t donate anything to charity”. “Oh, I see then you are exempt from the awards!”.
You have to question – how “charitable” the Trust is really being? Killing the UK market, killing those charity donations and helping no-one, in my opinion. Good job, I look forward to the next annual scrooge awards to see which company has been targeted for an inappropriate kicking – I do hope it isn’t us!
Please let me know your thoughts in the comments section below!