We can build trust in charities by making them more transparent and accountable, and embedding a culture of fundraising that reflects their values.
It’s very disappointing to hear public confidence in charities has fallen, though perhaps not surprising given the stories we’ve seen in the press over the past year. We are currently doing our two-yearly research on public trust and confidence, which will publish in a few months, and we may all need to brace ourselves for some hard reading.
I was a trustee for Womankind (the international women’s rights charity) for many years so I know about some of the challenges this sector faces. The relationship that donors in the UK have to giving to an international aid charity should be a wonderful one – as you’re bridging between people who can and want to give to people in need.
So what can we do to build trust? I will talk about 3 things that have a really strong link to trust:
- knowing how your funds are used – particularly with rules around terrorism and money-laundering
- and protecting your charities’ reputation.
First, knowing how your funds are used. We know that verifying how your funds are used can be challenging, not just in high risk and challenging areas like war zones. We published a compliance toolkit ‘Protecting Charities From Harm’ in 2013 which I want to recommend to you.
It tells you to know your partner. Due diligence is not a word of mouth recommendation from one person or another charity. It’s not a one-off exercise –think of it less as a marriage and more of an employment contract –which may have to change as circumstances change. It is a key aspect of trustees properly discharging their legal duty to protect charitable assets.
It’s critical to set expectations at the outset on what the partner will deliver – establishing conditions for funding and reporting and renewal. That way you protect the charity and also your partner, who understands what they need to deliver. Some trustees are under the misconception that after they pass funds to a partner they are not required to monitor and verify how they are used. We expect you to and we will challenge poor financial controls.
In the same vein, you need to know your donors and beneficiaries, and we want trustees to take a risk based approach – the higher the risk the more they need to do manage and mitigate it.
We’re pleased that charities are telling us when things go wrong – via serious incident reports. Charities reported nearly double the number of serious incidents last year compared to the year before (2,139 compared to 1,280). We want you to tell us when things go wrong - a loss, an incident, an allegation even if you don’t have all the information. It’s actually very simple. You can email us with what happened and how you are dealing with it. It’s better to do this than let us hear about it from a third party. That’s on top of the reporting obligations under s.19 of the Terrorism Act reporting any suspicions of terrorist financing offences you may have as soon as possible.
Good reporting is not just about you – it’s about protecting the whole sector from fraud and abuse. It will help us develop a true picture of problems in the sector that will help us target the right issues so you could be helping other charities too.
I can give you an example from last year of a rogue ‘international development’ charity of the kind that gives other charities a bad name, called Help Africa. We found out through HMRC – investigating their gift aid status, that they had no evidence they had spent any funds at all to relieve poverty or help beneficiaries in Africa. Two listed ‘trustees’ were not aware they were trustees at all. We removed Help Africa from the register of charities and one of the current trustees got an 8 month suspended sentence and 200 hours’ unpaid work .
Second point. Changes to fundraising regulation
The public response to poor practices in charity fundraising cannot be ignored, nor can Stuart Etherington’s review of fundraising regulation. This is a debate not just for fundraisers, but for anyone working in or volunteering for a fundraising charity and particularly for trustees. If you’ve read and responded to our draft fundraising guidance you’ll see we’re focusing on culture and a stronger emphasis on the role of trustees to oversee their charity’s fundraising activities. More rules on contact with donors could be especially tough on international aid charities which rely more heavily on emergency appeals to individuals.
The major problems are happening when charities do things that are at odds with their values or the values that people expect them to have, for example should a charity that’s designed to benefit older people not have clear agreements with fundraisers to ensure older donors are protected?
Trust depends on how you treat your donors and partners and the environment in which you work.
What we are asking of trustees on fundraising is to be actually engaged with what charities are doing and in the culture that the charities have. The buck stops with trustees and they should have safeguards in place to avoid the bad practice that led to last year’s headlines.
We cannot sit alongside charity trustees and make decisions for them about how to run their charity. The law doesn’t permit that, our resources don’t allow it, and no one seriously thinks it would be right.
When the new self-regulating charity fundraising body is launched our role will be to support it.
Let me end with one last comment on reputation. As a comms person by profession, I know reputation is one of your greatest assets, and where reputation in the sector is damaged, it affects all charities. I also know that when there is a public interest in an issue, you cannot simply ignore it. I keep hearing charity people saying, for example about executive pay, “that’s not the right question; we need to change the terms of the debate”. Well, sometimes that sounds just like a politician on the Today programme saying “John, that’s not the right question” – and we all know how that makes us feel. By all means bring the issues you want to discuss into the debate, but you can’t avoid the questions the public wants answered without damage to public trust.
We believe, indeed we know from our research into the drivers of public trust and confidence, that charities who do the right thing, are open and accountable and explain how they make a difference, enjoy more public trust. The Yougov research (published last week) shows charity’s reputation has been damaged, but in the fundamental things it remains strong. Two thirds think that charity “improves people’s lives and is socially useful” (66% compared to 68% three years ago).
For me the big challenges for the year ahead are making the sector more transparent, more accountable, embedding a culture of fundraising that reflects charities’ values.
If we see those changes happen, hopefully charities will start to win back that all-important public trust.