Problems at Naomi Campbell’s charity…

The Supermodel Naomi Campbell was recently banned from serving as a charity trustee for five years. This all came about due to problems at the charity which she founded.

Charities hold a unique position in society, tasked with alleviating suffering, addressing inequality, and improving communities. However, their operations can sometimes be marred by inefficiencies, mismanagement, and / or financial misconduct. The problems at Naomi Campbell’s Fashion for Relief charity show how important it is for charities to adopt business-like approaches to ensure their mission and financial health remain intact.

The Naomi Campbell Charity Scandal

The Fashion for Relief charity case is an example of what can go wrong when an organisation lacks financial controls and proper governance. Naomi Campbell, the founder of the charity, was banned from serving as a trustee for five years after an inquiry revealed widespread financial misconduct. Her charity, which raised £4.8 million between 2016 and 2022, donated only £389,000 to good causes. The rest of the funds were used on high-profile fashion events, personal expenses such as five-star hotel stays and spa treatments, and consultancy fees that benefited the trustees.

The investigation by the Charity Commission found that Campbell’s charity had serious governance failures, including unauthorised payments, a lack of financial transparency, and improper handling of funds. These issues ultimately led to Campbell’s ban as a trustee, along with her fellow trustee, Bianka Hellmich, who was also banned for nine years.

This scandal illustrates how the absence of strong financial management and governance can undermine even the most well-intentioned charitable efforts. Many of these issues could have been avoided with better financial oversight, transparent reporting, and ethical leadership—all of which are essential practices in the business world. Running a charity like a business would have safeguarded the charity’s funds and allowed it to make a more significant impact.

Why Charities Should Be Run Like Businesses

1. Financial Accountability and Transparency

One of the most critical areas where charities can benefit from business practices is financial management. Just as businesses must report profits and losses, charities should ensure that donors and stakeholders can see how funds are used. Fashion for Relief’s failure to keep proper financial records, including the absence of meeting minutes and inadequate tracking of decision-making processes, led to a lack of transparency and oversight.

Charities, like businesses, need to implement strict financial controls, regular audits, and clear policies on expenditure. This ensures that funds are directed to their intended purposes and that charities maintain their credibility with donors. Had Fashion for Relief operated with the financial diligence expected in a business, it might have avoided the scandal and fulfilled more of its charitable promises.

2. Efficiency and Resource Allocation

In business, maximising efficiency is key. Companies strive to minimise overheads whilst maximising profits. Charities should follow a similar principle, but instead of profits, the goal is maximising impact. In the case of Fashion for Relief, nearly half the charity’s income was spent on hosting glitzy events, leaving little left over for the causes it was meant to support.

Charities can draw from business practices to minimise administrative costs and ensure that as much as possible of the funds raised go directly to the people and causes they aim to help. Implementing strategies such as lean operations, prioritising high-impact projects, and monitoring the return on investment for fundraising events can increase a charity’s ability to do good.

3. Strong Leadership and Governance

In businesses, strong leadership drives success by making informed, strategic decisions that align with the company’s goals. Similarly, charity leaders need to be proactive, forward-thinking, and dedicated to the mission. However, they must also remain ethical and transparent. The Fashion for Relief case demonstrates how poor governance can lead to a lack of accountability. Trustees failed to keep adequate records, and funds were misappropriated.

To prevent similar issues, charities must have a clear governance structure, including independent boards of trustees who can hold leadership accountable. Trustees should have a strong understanding of the charity’s mission and financials, and they must operate with integrity and transparency. Naomi Campbell’s ban from acting as a trustee highlights the importance of such accountability and oversight.

4. Marketing and Fundraising

Top performing businesses are experts in marketing, knowing how to sell their products to maximise revenue. Charities, too, must effectively market themselves to attract donations and support. Events like Fashion for Relief’s glitzy fashion shows are not inherently problematic. In fact, such events can be powerful tools for raising awareness and funds. The issue arises when too much money is spent on the event itself, with little left over for the cause.

Charities should approach fundraising with the same strategic planning as businesses approach marketing campaigns. By analysing which fundraising strategies offer the greatest returns, charities can focus on events and initiatives that maximise both awareness and donations.

The Key Differences: Purpose, Ethics, and Stakeholders

Whilst adopting business practices can strengthen a charity’s operations, it’s crucial to remember the core differences between for-profit organisations and not-for-profit organisations. Charities exist to serve a social cause, not shareholders. Some of the differences are:

1. Mission Over Profit

Unlike businesses, which are driven by profit, a charity’s success is measured by its ability to fulfill its mission. Every decision made within a charity should be centered around its purpose. In the case of Fashion for Relief, the mission of supporting humanitarian efforts was lost amidst extravagant spending and personal gain.

Charities must ensure that their mission is always at the forefront of decision-making, balancing the need for financial sustainability with their responsibility to the people they serve.

2. Ethical Considerations

Businesses can, at times, prioritise profitability over ethics, but charities should always act ethically, even if it means making difficult financial decisions. The public holds charities to a higher moral standard than businesses because they are entrusted with money intended for vulnerable communities and important causes.

Fashion for Relief’s downfall was partly due to its ethical failures—using charitable funds for personal luxuries like five-star hotels and spa treatments directly contradicted its mission of poverty relief. Had the charity upheld its ethical obligations, it could have avoided the scandal and retained its public trust.

3. Stakeholder Engagement

In a business, the main stakeholders are typically investors and customers, whereas in a charity, the stakeholders include donors, beneficiaries, and the broader public. Charities must engage with these groups transparently and frequently. Donors need assurance that their contributions are making an impact, and beneficiaries must see that the charity’s efforts are improving their lives.

In Fashion for Relief’s case, donors were misled about where their money was going, and the charity failed to meet its financial commitments to partners like Save the Children and the Mayor’s Fund for London. Engaging with stakeholders regularly and keeping them informed about the charity’s activities and financial health is essential for maintaining trust.

Conclusion

Running a charity like a business, with a focus on financial accountability, efficiency, and strong governance, is key to ensuring long-term success and trustworthiness. However, charities must never lose sight of their purpose, ethics, and stakeholder relationships.