First published in Charity Finance magazine May 2013, by Civil Society Media Ltd
All charities are accountable to the public. That is a fact, not an aspiration. But while charities don’t have a choice about whether or not to demonstrate accountability, it is important they understand just what a difference it can make when they tell their story well.
We know the public places enormous value on information about charities. Recent independent research reveals that understanding how charities use their funds and fulfill their mission is the single most important factor driving trust. Conversely, the most important reason some charities are trusted less than others is that people do not know how their money is spent. So charities that take accountability seriously and get their messages across effectively stand to benefit from increased support, and those failing to do so risk losing support and undermining trust in the sector as a whole. And maintaining public trust matters to all charities, regardless of whether they rely on direct public donations. All charities benefit from the legal and fiscal privileges charity status confers.
Perhaps the more interesting question is not why accountability, but how. From the Commission’s perspective, accountability in charities starts with meeting the basic legal requirements. All registered charities must file a certain amount of information with the Commission each year; this information is made publicly available via the online register of charities. Sadly, some charities fail to meet even these minimum standards. In 2011-12, 14% of charities required to submit accounts to us failed to do so on time. And while the sector overall is making progress in this respect, the Commission thinks it could do a great deal better, which is why we have made promoting charities’ compliance and accountability a strategic priority. For example, as part of his review of the Charities Act, Lord Hodgson suggested that charities that fail to file on time should be disqualified from claiming Gift Aid. We support this suggestion. We are also considering whether to actively advise the public not to give to charities that let the sector down by failing to file their documents on time. The big red border that appears against a defaulting charity’s online Register entry already helps people recognise which charities are on top of their paperwork, and which charities have the strongest record of filing on time.
Demonstrating accountability, of course, goes beyond meeting legal requirements; it’s about a genuine commitment to helping the public understand what it is your charity has achieved with the resources available to it. This requires charities to think not just about the accuracy of the information that populates their online Register entries, but also about its impact. Ask yourself what the information looks and feels like to your donors and the public. Is it clear, powerful, engaging? Getting this right requires people who can work with words and ideas, as well as those who know the numbers. This is why, in my view, heads of communications need to be involved in the annual reporting process; think of the annual report and accounts as a shared responsibility between finance directors and your communications function. Involving communications people also helps ensure you answer questions that might emerge from your accounts – for instance, from journalists – before they arise. Comms people know that accountability often means getting your defence in first by tackling difficult issues head-on. For example, if your charity has appointed a new CEO at a competitive salary, it is best to explain why this is in the very best interests of your charity and its beneficiaries before you’re challenged about it. Of course, I don’t suggest that this can only be achieved by people with Communications backgrounds; I have worked with many brilliant senior executives with backgrounds in finance and accounting who understand that telling a story and using language the public understands is part of being accountable.
One final thought: accountability does not equal popularity. Trustees have a responsibility to follow their charity’s mission and objects, not the whims of public opinion. While you should be mindful of the reputational implications of your decisions, they shouldn’t be your prime consideration. Sometimes, being truly accountable means explaining why you’ve done the right thing, not the popular thing.