Q Scores
Our methodologyWhat is a Q Score?
UK charities are financial institutions with their own discrete accounting conventions specialist regulator. In this sense they are like any other financial institution such as building societies or life funds.
As such, they are amenable to financial analysis to determine their overall financial characteristics. Given that charities’ principle objective is to provide philanthropic services, they require an analytic framework that recognises their philanthropic purpose.
“Q” scores are an attempt to provide such an analysis reflecting the overall philanthropic purpose. It does however exclude the nature and the form of philanthropic intent. All charities are treated the same irrespective of the form that their philanthropy takes.
Where does the data come from?
The “Q” score model is based on revenue and balance sheet data drawn from the Charity Commission’s Part B Table that records at a relatively high level revenue and balance sheet data for c 20k of the larger charities. The data covers several years.
“Q” score downloads this data for 5 years for 2,000 of the larger charities and effectively reconstitutes the underlying accounting information. The accounting data is indexed for inflation to restate the data in terms of constant values. From the adjusted data, it
calculates and scores 28 ratios under 5 separate sectors. The scores are weighted in reflection of their importance to achieve an overall single score.
This allows for variances to be calculated for all charities against the portfolio averages. These indicate whether an individual charity’s score is greater of less than the portfolio average. This gives an indication of relative performance or effectiveness.
The volatility of the sector variances is analysed to indicate the current and prospective volatility or stability of effectiveness.
How can a Q Score help?
From the database of “Q” scores, underlying data and variances it is possible for:
- Charities to develop an explicit agenda of change that allows them to move their relative effectiveness.
- Charities to compare themselves with peers operating in the same philanthropic sector.
- Providers of Professional Services to evaluate the effectiveness of their clients and how they may be able to assist clients with their programmes of change.
- Charities to evaluate the performance of their professional service advisers across the totality of their charity clients.
We believe that the introduction of enumerated “Q” scores and their associated reports and information will increase transparency in the UK charitable sector. This approach mirrors developments that have been adopted for many other financial institutions.
PIR Service
Using the Q Scores analysis, Public Information Reports (PIRs) are prepared for each charity within the study. These will be based on “Q” data and information drawn from charities’ individual annual accounts. We believe this will make the analysis easily accessible to
the public at large.
PSP Service
Using the Q Scores analysis, we can also deliver more bespoke reports tailored for …. [explain PSP service briefly - link to PSP service page]
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