Bailing out the charity sector

There is no doubt that the charity sector is currently caught in a growing swell of criticism and accusation. For the past 24 months the sector has been faced with negative headlines encompassing executive pay, investment policies, fundraising and funding. The recent decline of Kids Company and the British Association for Adoption and Fostering has seen newspaper commentators bemoan the lack of regulation governing the sector.

On paper that regulation looks anything but lacking. The Charities (Protection and Investment) Bill currently proceeding through Parliament will introduce further measures that will see the sector, and especially those that govern charities, facing arguably more draconian oversight than other sectors. Given the trust placed in charities by those they aim to help and those that support them – directly and indirectly via tax breaks – there should be a high level of expectation in them being run appropriately.

With 180,000 registered charities in England and Wales, it would be unsustainable to fund a regulator to the level of inspecting each charity every year. The sector, therefore has to get better at regulating itself and demonstrating to the wider society that it is working in a manner that most supporters and stakeholders would deem appropriate.

Last year’s Charity Commission research ‘Public trust and confidence in charities: analysis of findings’. showed that public confidence and trust in the sector has not diminished.

‘It is encouraging to see that overall trust and confidence in charities remains high, at 6.7 out of ten. This level has not varied significantly in recent years and suggests that trust and confidence in charities is resilient. Such resilience is a testament to the day to day work of charities which continues to inspire strong support from the public.’

However, the sector cannot afford to be complacent as the research continues to say that those that believe charities to be trustworthy has dropped to 71% (from 75% in 2010).

We may be taking on water but we should not forget about repairing the hole. It is therefore incumbent on charities to raise awareness more widely about how modern charities operate, their success and failures, and the degree to which they have made a positive impact on the communities they work with and the wider society. As individuals, we have become less deferential to those with knowledge and power. The sector should read the runes and adapt accordingly. It is within their gift to take a powerful message to the newspaper commentators and other critics. The charity sector has a very important place in society, and not just those that benefit from their services and activities.

As the Commission’s report noted:

‘Almost all people (96%) agree that charities play an essential, very important or fairly important role in society.’

Let’s roll up our sleeves; there’s work to be done to nudge that up to 100%.

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Look out for Damaged beyond repair in the September issue of Governance and Compliance (govcompmag.com) for more analysis of the Kids Company story.

ICSA’s two-day conference in March 2016 has a stream dedicated to the not-for-profit sector. To be kept informed as the programme develops register your interest.

Louise Thomson, FCIS  is Head of Policy (Not-For-Profit), at ICSA: The Governance Institute

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