The Charity Commission for England & Wales last week released its new 5-year Statement of Strategic Intent; which was marked by a speech from the relatively newly-appointed Chair, Baroness Stowell.
On the face of it, this may seem like an impossibly dry and technical thing to be talking about, but stick with me. In actual fact both the strategy and the speech contained a number of fascinating points that raise big issues for civil society and non-profit organisations not just here in the UK, but around the world.
Before I get into exploring some of these points, it is worth giving a tiny bit of context for anyone who I coming to this cold. First is to say that the Charity Commission is the government regulator for registered charities in England and Wales (Scotland and Northern Ireland have their own regulators), and has been operating in various guises for more than 150 years.
It is fair to say that the last few years have been tough ones for the Commission: it has had to endure budget cuts and freezes; been criticised for its perceived lack of effectiveness (most notably by the National Audit Office in an excoriating 2013 report); and faced questions regarding the political bias of its Chairs and Trustees. In particular, the process of appointing the current chair, Baroness Stowell, was tainted with acrimony and even saw an influential committee of MPs refuse to endorse her appointment to the role (advice which the government chose to ignore). The previous Chair, William Shawcross, also enjoyed an antagonistic relationship with the sector - so it is safe to say that tempers surrounding anything the Charity Commission does are generally running fairly high.
Against that backdrop, let’s look at some of the specific points.
1 TRUST
The part of the strategy and speech that has received most attention so far (and raised the most hackles among charities) is the claim that charities are facing a crisis of public trust. This is not a new move from the Charity Commission: the previous Chair William Shawcross repeatedly raised the issue, and whilst Baroness Stowell seems to have decided to put distance between herself and her predecessor on some issues, on this one she appears to be doubling down.
There have been a number of high profile charity scandals in the last few years around safeguarding, aggressive fundraising, executive salaries and so on. These have stoked a narrative about public attitudes to charities turning more negative. It is important to say before going any further that many of these individual cases are indefensible, and the individuals or organisations involved have rightly been censured. The ongoing trust of supporters and the wider public is one of the most precious assets charities have, so they can never afford to be complacent about it.
Claims about public trust remain controversial, however, for two main reasons. Firstly, because even though many people would agree that these cases need to be taken seriously, they disagree that we should extrapolate to claims about a wider ‘crisis of public trust’. And secondly, many would argue that while it is the Charity Commission’s role to address these sorts of issues through regulation, it is not its role to perpetuate a narrative that actively risks undermining public trust. (Particularly given that maintaining public trust in charities is one of its stated aims, or at least was).
In terms of the first objection, some dispute the evidence of a widespread downturn in public trust in charities. The Charity Commission points to its own polling published earlier this year, but other surveys suggest different trends. Some, meanwhile, point to the difference between the stated behaviour one can identify through polling and the actual behaviour people exhibit through their action, which can often be markedly different.
When it comes to charitable giving, for instance, our own research suggests that levels of donations have remained pretty much constant despite the high-profile scandals, so it may not be having much of an impact on people’s behaviour. One possible explanation for this may be that when you ask people about abstract concepts like “trust” and talk about “the charity sector” as an entity it gets too far from their day-to-day experience; so their responses don’t reflect how they actually act. Hence many of us have a sort of cognitive dissonance - where we can believe at one and the same time that the charities we know and support are trustworthy and doing wonderful work, but that “charities” as a whole are untrustworthy and inefficient. (This is something I discussed on the Giving Thought podcast with Dan Fluskey from the Institute of Fundraising).
The other point some have made is that all the talk about “trust” in this context is incorrect; and actually what we are talking about is something closer to “confidence” (and that the two things are distinct). This is an interesting point to consider, although perhaps in danger of being too nuanced for the arena of political debate. What it does show, as do the arguments highlighted above, is that the whole notion of “public trust” and the factors affecting it is far more complex than it is sometimes presented.
In terms of the second objection - about whether it is the role of the Charity Commission to drive a narrative on declining levels of trust – this goes back to a wider debate about what the role of a regulator should be in relation to the sector it regulates. In the case of the Charity Commission, this has often been framed in terms of whether it should act as a “friend or policeman”. The reality is obviously more complex than this (as I discussed on the Giving Thought podcast with former Charity Commission Head of Litigation Chris Willis Pickup). However, it is certainly true that the last decade or so has seen a shift from the Commission viewing its primary role as that of helping the sector (through providing advice services etc.) to seeing it as more about holding the sector to account. The concern some people have is that this role has been taken on with too much zeal in certain instances, and this has resulted in the Commission going simply beyond offering warnings to making pronouncements which actively damage public perception of charities. Whether or not you agree with this view, it is important to bear it in mind as context when considering the new strategy.
The key difference between the latest pronouncements on trust from Baroness Stowell and those made by her predecessor, William Shawcross, is the conclusions she appears to be drawing. Whereas Shawcross often identified political campaigning as one of the key factors responsible for undermining public trust, Stowell makes no mention of this. Rather, for her, it is an issue about ensuring that charities hold themselves to the highest possible ethical standards in all aspects of their operations, and see the way in which they pursue their charitable mission as just as important as the outcomes they deliver. This brings us to our next point.
2 Charity as an activity, not a means to an end
The idea that charities - and indeed the Charity Commission - should think about the wider impact of their operations and behaviour, and not just the direct impact of their mission-focused activities, is really the centrepiece of the new strategy and Baroness Stowell’s speech . This framing of charity as an activity, rather than just in terms of the outcomes it produces is interesting for a number of reasons.
Firstly, there is a sense in which it reflects a political viewpoint. Conservatives (with a small “c”) in the UK have often been most positive about the idea of charities when it can be framed in terms of voluntarism, charitable giving and Burkean “little platoons” of citizens freely associating to improve their surroundings and wider society. This was basically the central theme of David Cameron’s Big Society agenda; and has more recently been seen reflected in the Government’s Civil Society Strategy (as detailed in a previous blog). On the other hand, conservatives have tended to be much less enthusiastic about the idea of a professionalised, “third sector” version of charity that is viewed as too-closely mirroring the approach of the state.
If one is primarily focussed on outcomes or impact, there is arguably a tendency to veer towards a more formalised, infrastructure-heavy view of the charity sector where concerns such as efficiency and measurement are at the fore. If, however, one places the focus on the idea of charity as an activity, then one is likely to place a greater emphasis on ideas like empowering people and communities or giving individuals agency; and this might lead one to err towards a different, less formalised view of the what the charity sector should be.
The idea that those who engage with charities can benefit from the process of doing so, and not just from the specific services delivered or outcomes achieved, is not new - but it is powerful. In many ways it is the cornerstone of the continued case for the value of charity and philanthropy within our society. If we focus solely on outcomes, then the fact that there is a lot of overlap between the kinds of public good that charities aim to deliver and that which the public sector (and, increasingly, the private sector) is also aiming to deliver makes it hard to see why charity is better than any other way of achieving the same ends. If however, we take into account the additional value that comes though giving people and communities a sense of agency in solving their own problems, or the way in which voluntary action can create additional social capital, then a much clearer case can be made.
Baroness Stowell makes a strong case of this kind, and argues in favour of the role that the process of charity can play in addressing issues like social division or building civic engagement, saying that: “Charitable behaviour has a unique potential to bridge divides and help us confront uncertainty with purpose and hope….Acts of charity bring people together - in place and in shared aims, attitudes and achievements. This echoes the words of the 1952 Nathan Committee report (which I am aware that I over-quote chronically), which argued that: “voluntary action… is the nursery school of democracy.”
The flipside of this positive vision for the good that charities can do through the way they operate, however, is that negative behaviours are seen as equally damaging - as we have already seen. Hence there is no sense that “the end justifies the means” and a charity that fails to meet the required standards of behaviour despite delivering great outcomes would be seen as failing overall.
The idea that charities should act ethically and with propriety in all they do is hard to argue with. The potential danger, however, comes when you define what is to count as “good behaviour”. There are some examples that are absolutely clear cut; either because laws have been breached or because obvious ethical or moral principles have been ignored. But there is also going to be a lot of grey area.
Interestingly, the example Baroness Stowell herself uses to illustrate her point about “good behaviour” falls somewhat in this grey area. In her speech, she cites the case of charity which chose not to compete for a Local Authority service contract because it was already being delivered well by another charity. And she says approvingly that the CEO was “aware that as a leader of a charitable organisation, they have a wider responsibility towards the flourishing of charity as a whole, so more people benefit. To making society a bit better, a bit kinder. That’s charitable behaviour, that’s behaviour that separates a charity from a profit-making business, that’s the attitude, the ethos the public expect.”
The thing that is odd about this example is that it is not immediately clear that the counterfactual – i.e. the charity in question deciding to compete for the contract - would be immoral or unethical. Rather the implication is more about the perceived commerciality of “big charity”, and the idea that charities (as purpose-driven organisations) should display more of a sense of collective responsibility and selflessness. I happen to agree with this, but I also know plenty of people who think the opposite and would argue that the sector needs more competition, not less. I may not agree with them, but I’m not sure I would characterise their views as “bad” or “wrong”.
The really interesting thing here is that by using this particular example, the Charity Commission are choosing to characterise the distinction between ’good’ and ‘bad’ behaviour in a way that carries far more substantive implications than if they had just used an example of clear-cut wrongdoing or illegality. Getting to grips with this distinction is going to be an important task for charities in the coming years.
3 Data and public choice
A really positive element of the new strategy is the emphasis on data. As I have argued elsewhere, data is the key to making organisations more effective and potentially making the allocation of philanthropic resources more rational. Given that data is also the raw fuel for developing machine learning algorithms (see here for more), it is vital that the charity sector gets its house in order when it comes to data so that it is in a position to harness the potential of AI and automation. The Charity Commission will have a pivotal role to play here, as it is one of the main repositories of data on charities in the UK and has the ability to shape the way in which data is collected and used through its regulatory reporting framework.
One intriguing part of Baroness Stowell’s speech was where she said that: “Working with others, I want us to become less of a warehouse for charity data, and more of a curator of knowledge about individual charities, and about the sector.” This potentially marks a big change in direction in terms of the way the Commission views its role in relation to data, and it will be fascinating to see how this ambition is developed.
4 Adaptation and future-proofing
Another positive part of the strategy is the emphasis on helping charities to adapt to changing circumstances. In part, this is about giving them the skills and knowledge they need to engage with new technology, and to harness data (as outlined above). But it is also more fundamental than that. It is about facing up to the fact that the wider landscape for doing social good is changing rapidly as new organisational forms emerge, platforms are developed, and the private sector increasingly looks to combine purpose with profit.
The rise of network models for social change campaigning- like #MeToo, Black Lives Matter or Justice for Grenfell - raises big questions for charities in terms of how they respond. And in the future new technology could allow these kinds of models to develop to the point where they present an existential threat to traditional organisations (as I argued in this article).
Whilst Baroness Stowell doesn’t go down the same rabbit hole of talking about blockchain technology and Distributed Autonomous Organisations as I have, her speech does make repeated mention of the idea that charities won’t have monopoly on doing good in future. She says that “Charities do not have a natural, eternal monopoly over the channelling of our altruistic impulses,” and that “People can find other ways to do good that do not depend on registered
This is not, as I see it, meant as a counsel of despair. Rather it is a clarion call to charities to refocus on what it is about the registered charity as a legal form - and all that it entails in terms of governance, laws and regulation – that makes it still unique and valuable in this more crowded environment for doing good. As Baroness Stowell puts it: “Charities and the Commission have a shared, collective responsibility for ensuring that the concept of Charity survives into future generations, and to enable charities to maximise the good they do.”
I think this is absolutely spot on. There are definitely going to be some things that charities currently do that they will not do in the future. Likewise there will be many things that they do very differently. I firmly believe that there will still be huge value in the formal structure of the registered charity. The challenge, however, is to identify precisely what this value will be and then work to ensure it is maximised.
5 Charity RegTech?
Another titbit I spotted in Baroness Stowell’s speech was that she said: “in future, I want us to make better use of technology, to become more fleet-of-foot in concluding straightforward enforcement cases.” This acknowledgment of the Commission’s own need to use technology more effectively opens up a range of intriguing possibilities. There is already a whole field of “RegTech” (regulatory technology) across a number of sectors – where regulatory bodies are trying to harness cutting edge technology to make their own operations more efficient and effective.
There has been little sign so far of a significant amount of “charity RegTech”, although Chris Willis Pickup highlighted in the podcast chat I had with him that the Charity Commission had been doing work in this area, including experimenting with machine learning. Perhaps the announcements in the new strategy signal that this is an area the commission will push much harder on in the next few years.
(And if you want a slightly speculative idea of where charity RegTech might go in the future, check out our 2016 Giving Thought paper Block & Tackle).
6 What wasn’t said
Speeches, much like jazz, are often as much about the notes you don’t play as the ones you do. So it is worth highlighting briefly two obvious things that were missing from Baroness Stowell’s words.
The first, as we have already seen, was political campaigning. Given what a bone of contention this became between the Charity Commission and the sector under William Shawcross, the fact that it was not mentioned at all in this speech seems noteworthy.
The other thing that was missing was the vexed issue of how the Commission is to be funded in the future. Again, under William Shawcross, the idea of charging charities to be regulated had been floated (an idea that CAF opposed, for reasons that we laid out in this paper). Baroness Stowell made no mention of this though. Instead she chose deliberately to park the issue, saying only that: “Our ambition for the charity sector is greater than our current capacity. But before any debate about resources, it is right that I set out what role the Commission intends to play to deliver the greater benefit for the public that we and the sector together have the potential to create.”
Both the issue of charging and that of charity campaigning may yet return, but for now it seems as though these have been superseded by other things in terms of the Charity Commission’s priorities.
So away from the continuing controversy over the issue of public trust and how it is interpreted, which has inevitably dominated the headlines do far, there are many encouraging and intriguing things in the Charity Commission’s new strategy to pick up on. Many of these mark fairly significant shifts of tone and direction, so it will be interesting to see how they are taken forward and how the charity sector as a whole reacts.