Comic Relief's investment in tobacco, alcohol and arms firms has caused widespread outrage. But is it possible that the hype caused by Panorama could do even more harm than the initial investments themselves? We should be wary of highlighting only the negative aspects of charities, and neglecting the immense good they can do.
BBC Panorama reported on the 10th of December that 'Millions of pounds donated to Comic Relief have been invested in funds with shares in tobacco, alcohol and arms firms'. Comic Relief raises millions of pounds every year through large-scale events such as Red Nose Day and Sport Relief. This means it hold tens of millions of pound at a time, some of which is invested in the stock market before it is donated to the charities it supports. Doing so is important to make sure that they have as much money to help their beneficiaries with as possible. Among the investments they made in 2009 were ones to the alcohol, tobacco and weapons industry.
It's true that on the face of it, this is contradictory to Comic Relief's stated mission: they claim in their Mission Statement to want to help 'people affected by conflict' and to 'reduce alcohol misuse and minimise alcohol-related harm'. They're also committed to fighting tuberculosis, which can be related to smoking. However, it's not clear that these investments do contradict Comic Relief's mission. It may be that the increased donation they can make to fighting tuberculosis outweighs the harm their investment in the tobacco industry did (for example). On the other hand, it's very difficult to know precisely how much harm the latter caused.
A factor which has been discussed very little so far is how donor behaviour may change in response to this type of scandal. Knowing that a charity's investments appear to be unethical (whether intentionally or not), a lot of people may well be moved by thoughts like 'My donations aren't helping, they may even be harming. So it is not worth donating to charity at all'. As a result, they may give less or stop giving at all.
But this is not the right response. The message we should draw from this scandal is that we need to know how our donations are being used. We have the potential to do a lot of good with our donations in the long run. That's true most of all if we carefully assess the effectiveness of the charities we give to. But even donations to organisations like Comic Relief have the potential to do a lot of good, and make progress towards combating extreme poverty. Comic Relief benefits from strong brand awareness (allowing them to raise truly astounding amounts to combat global poverty - over £100 million in a year!!) and economies of scale (allowing them to use that money efficiently). They also fund (among many other things) some of the most cost-effective causes that are working to combat global poverty, including a grant of over £100,000 to SCI this summer.
This scandal reminds us to consider the impact of our donations. It should also make us reflect on the donor scepticism and therefore negative impact that can be the result of a report such as this. I hope this will motivate more people to think carefully about their donations, rather than turn their back on giving to charity altogether. We all have the potential to do a lot of good through charity if we want to!