Is it right that charities provide more accountability to their stakeholders, if so how?
The first of the Charity Commission’s new objectives is to hold charities to account. ‘Holding to account’ means more than just ensuring that charities comply with the law. It’s also about ensuring they appreciate and act on what the public expects of them.
Why? Because the Commission’s research shows that there is a direct link between accountability and trust. If you want people to trust you, you must show them that you are worthy of that trust. This is why the Commission has started talking about the importance of getting attitudes and behaviour right as well as legal compliance.
In 2018, the things people identified as being most important when deciding whether to trust a charity were being transparent about where their money goes (and spending it responsibly), being true to their values, and demonstrating the positive difference they make. Note that there is a strong overlap with three basic duties of trustees: ensure your charity is carrying out its purposes for the public benefit; manage your charity’s resources responsibly; ensure your charity is accountable. But it’s not just about doing these things. It’s about enabling your stakeholders to see that you have done them.
I never met anyone who liked the word ‘stakeholders’. Stakeholders are people — your people. They include your service users, supporters, donors, funders, members, staff, volunteers, community… That’s why someone had to invent a word meaning all of them. Those people who have a close connection to your charity. People who are, in some way, part of your charity and its work.
So, when we talk about the public (and what they expect), we really mean them — your stakeholders. In my experience, it’s unusual for a random stranger to complain about a charity. It’s more likely to be someone who feels invested in that charity.
Is compliance with the law enough?
It’s all the regulator can strictly enforce, but it’s a low bar. For example, your accounts and annual reports. Of course they must meet reporting and accounting standards. You must file them with the regulator on time. But accounts and reports can comply with the letter of the law without really telling anyone the whole story. Did you use your funds responsibly? What difference has your charity made this year? Great that you did lots of things, but what changed? A compliance statement on public benefit doesn’t explain that. Be a bit bolder. Tell some stories of the people your charity helped, or the projects you ran and what happened. Stories are a good place to start in describing your impact. And be honest, don’t exaggerate.
And when something goes wrong, how do you respond? Complaints may seem irritating, but every complaint has the potential to tell you something about your services, or how your charity’s words and actions come across to your beneficiaries, donors, and other stakeholders. A complaint well-handled can lead to a good outcome.
When something goes seriously wrong (such as a disaster, or a new charity scandal) there are always calls for the regulator to take action. Regulators have often responded by tightening up the rules, to stop something from happening again. This leads to a tension between regulation and deregulation. A better approach is to pause and reflect on what it is we want to achieve. Are more rules the solution, or is it about changing the way people think and act? Sometimes the two need to work together. (Controls around smoking are one example — a combination of awareness raising of the health issues and a ban on smoking in enclosed work places.)
Charities want and need the public — their public — to trust them. If you want someone to trust you, it changes the way you act towards them — you make an effort. You don’t just assume you are entitled to their trust.
The Charity Governance Code provides a good steer on openness and accountability. Do you think it goes far enough? Are the recommendations practical? How do you apply them to your charity? Do you think it should go further? Take part in the consultation before 28 February and let the Code Steering Group know what you think.
