Penny Appeal spent 27% of its income on charity in 2014

Penny Appeal

Accounts submitted with the Charity Commission have revealed that Penny Appeal spent 27% of its income on charity during the 2014 financial year, writes Roshan Muhammed Salih.

The accounts, which were filed 195 days late on September 11, 2015, say that the charity’s income for the year was £2,504,097. Out of that £670,000 was spent on charitable causes, while £1.1m was spent on “income generation and governance.”

Penny Appeal, which solicits donations from the public, says it has retained £810,000 for “future use.”

The accounts also reveal that Penny Appeal has eight employees and 350 volunteers. The Wakefield-based charity works with celebrities such as the boxer Amir Khan and the nasheed artist Saif Adam. And it is heavily promoted by British Muslim TV.

Penny Appeal’s charity-to-income ratio of 27% compares very unfavourably with other British Muslim charities, which tend to spend between 65-80% of their income on giving to the needy.

On its website Penny Appeal tells the public: “Your donations provide aid to poor and needy people in over 30 crisis-hit countries worldwide. You can help us build wells, care for orphans, deliver urgent medical aid and healthcare, provide nutritious meals, open schools, orphanages and mosques, care for the elderly and much more.”

Aamer Naeem, the CEO of Penny Appeal, told 5Pillars that the accounts give a distorted impression of the money the charity has actually spent on helping the needy. He said that although the charity’s overall income was indeed £2.5 million, only around £1.8m of that was from donor donations. Out of that 1.8m, £1.47m has been (or will be) used on charitable activities, which is a ratio of 79%.

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He added that the charity’s figures for 2015 will more clearly show the high percentage of money that it actually spends on helping the needy.

Naeem also clarified that, Penny Appeal and British Muslim TV are separate entities. He said Adeem Younis owns and is the chair of trustees of Penny Appeal but the charity has a “normal advertising relationship” with British Muslim TV, just like Islamic Relief does with Islam Channel.

“We are a small charity that has grown really well in recent years,” he said. “But we haven’t spent all the money we have in reserve because some of our projects are long-term ones such as an orphanage project we have out in Gambia. Our first priority isn’t how our accounts will look to the public, it’s about implementing projects on the ground in the best way possible.”

Comparison with other charities

However, in comparison with other British Muslim charities Penny Appeal seems to come out badly if judged solely on the Charity Commission accounts.

5Pillars did a simple search on the Charity Commission’s website of all the charities registered with the Muslim Charities Forum (Penny Appeal is not registered with them) and found the following:

Islamic Relief’s income was £99.1m in 2014 and their charitable spend was 79% of that.

Muslim Aid’s income was around £43.6m and their charitable spend was 83%.

Human Appeal International’s income was £21.2m and their charitable spend was 65%

Muslim Hands’ income was £14.7m and their charitable spend was 89%.

Orphans in Need’s income was £8.9m and their charitable spend was 78%.

Islamic Help’s income was £4.4 million and their charitable spend was 65%.

Human Relief Foundation’s income was £3.8m and their charitable spend was 66%.

Al-Imdaad Foundation’s income was £3.4m and their charitable spend was 91%.

Muslim Charity’s income was £3.2m and their charitable spend was 70%.

National Zakat Foundation’s income was £1.7m and their charitable spend was 75%.

And Read Foundation’s income was £1.4m and their charitable spend was  76%

You can find financial information about other British Muslim charities by putting their names into the search engine on this page.

“Searching questions”

A Muslim charity insider told 5Pillars that while the layman would undoubtedly be shocked at the Penny Appeal figures he was not surprised because “it was obvious” the charity was spending heavily on promotion.

The insider, who did not want to be named, said: “Charities which are new and want to establish themselves do tend to spend a lot on promotion at the beginning. And then when they have a larger income stream coming in they will spend a greater percentage of it on charity in future years. So one-off figures like this can be misleading and it’s better to judge a charity on a five year cycle.”

However, he added: “I do think clarification is needed about the relationship between, British Muslim TV and Penny Appeal because there could be a potential conflict of interest there. They need to clarify this relationship because there is currently confusion in people’s minds.”

Another charity expert was more condemning. He said: “These figures are very high and need further examination for an explanation as to how they were arrived at. When charities appear to be spending excessive amounts on administration and income generation donors should be asking searching questions.”

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