Comic Relief’s Red Nose Scandal

We have all become accustomed to the annual Comic Relief event, many of us actually look forward to watching the show on TV and enjoy donating our hard earned cash to the good causes it supports hoping to help make a difference to someone’s life somewhere in the world so you may be surprised to learn that the people behind the charity not only invest the money they collect but have made some really bad investments.

Comic Relief has raised many millions of pounds over the years for charities here in the UK and also abroad. As well as direct donations they also pass funds to smaller charities to assist them in their causes, sometimes in one off donations but often in a maintained schedule that can see some charitable causes receiving funds over a period of years, this means that Comic Relief are constantly managing a revenue stream of many millions of pounds.

To leave this kind of money sat idle in a bank account could be seen as a wasted opportunity as interest rates are dismal at the moment so to try and make the money they are holding some large charities like this use investment funds to grow the pot, and here lies the problem.  A recent BBC show has uncovered that some of the funds collected by Comic Relief had been invested in companies that go against the cause these organisations are trying to combat which is a huge contradiction in terms.

For instance amounts totalling several millions of pounds have been invested in companies such as BAE weapons manufactures, Diageo who supplies alcoholic drinks and even tobacco companies. None of this would have been on the mind of donators when they made their pledge on red nose day.

Like most people I would have expected that the funds this kind of event generates goes direct to good causes, the actual fact that these funds are invested first is not an issue as long as good business decisions are made and the investments are made with full knowledge of who and where the money is going and that all the profits are released back into the charity and not into the pockets of greedy investment brokers. Sadly this kind of behaviour casts a shadow over the hard work that charities do and will no doubt leave many people reluctant to donate in this way in the future.

The worrying thing that future donators may want to consider is that rather than come out and apologise for the mishap Comic Relief have refused to comment on where the funds are currently invested and have changed the way they present their annual accounts, this means it is now impossible to see where they are actually putting the investments and could also be construed as a ‘ducking and diving’ act, not the kind of behaviour one would expect from a apparently charitable organisation.

Panorama, the BBC investigative show that revealed this story spoke to Helen Wildsmith who as an ethical fund manager looks after the cash of thousands of charities said that she was surprised that Comic Relief would risk its integrity, reputation and future donations in this way,  she went on to say

“If people who’ve been giving them money, after watching the television, next year think twice and don’t give that money, because they’re concerned about their investment policy, then that could be argued to be a breach of fiduciary duty.”

If you usually make a pledge or donation then maybe it’s worth looking at charities at local level from now on rather than donating to what seems to be another cooperate organisation capitalising on its position.

One Comment

  1. Pingback: Inthebusiness (inthe_business) | Pearltrees

Comments are closed.