Charities can no longer solely rely on ‘doing good’
Tags: Efficiency, Decision Making, Charity

Charities ‘no longer have an immutable monopoly on doing good’, warned Baroness Stowell, Chair of the Charity Commission, in her 2020 Charity Commissions speech. She pointed out that as purpose-led businesses, social enterprises, and philanthropic efforts are growing globally, they are now seen as real alternatives to charities. According to the Commission’s 2020 survey, whilst the majority of those surveyed are in favour of charity as the best way of supporting good causes, 24% feel neutral whilst 20% believe there are ‘better ways of channelling support for good causes’ than going through charities. The perceived importance of charity has also fallen over time, from 76% in 2012 to 55% in 2020. This may correlate with the increasing trend of businesses who position themselves as being ‘purpose-led’. In 2019, 181 US corporations — incl. Amazon, Apple and JPMorgan — have signed up to Business Roundtable’s call to change the official definition of the purpose of a corporation from generating shareholder returns to ‘improving our society’, which means investing in their employees, protecting the environment and dealing fairly and ethically with their suppliers. As of July 2020, 90% of companies in the S&P 500 have made publishing annual corporate sustainability/ESG reports the standard.

Stowell asked charities to hold higher standards and demonstrate ‘charitable behaviour and attitude’ in everything we do and the way we do it — better than other types of institutions. Dame Julia Unwin, who led the work of inquiry into the future of civil society, warned that too much focus on ‘protecting reputations and income streams’ may lead charities to lose connection with the people they are there to serve. For many charities who see income generation as a main priority post Covid, it is crucial that whilst we are striving towards a more sustainable way of providing service to our beneficiaries, we do not lose sight of our mission and charitable purpose.

Apart from staying true to our charitable purpose, it is imperative that we become more effective at what we do. The Charity Commission survey showed that 79% of participants rank ‘a high proportion of the money charity raises goes to those it is trying to help’ as the most important factor for a charity, whilst only 57% believe charities are ‘very much’ and ‘to some extent’ doing it. A Nesta’s report found that decisions tend to happen very slowly within charities, with too many hoops to jump through for

anything to happen — let alone responding to changes quickly enough. It is understandable that many charities have a legacy and reputation to protect. On the one hand, we can’t afford to be too risk averse that we may render ourselves irrelevant as the world around us moves on; on the other hand, we can’t be too risk-taking that we further erode public trust in charities, which has not recovered from a series of charity scandals since 2014, or embark on risky ventures that may bankrupt the organisation. The inconvenient truth is that no one has the perfect information to make the perfect decision that will ensure success; all we can do is to take what we have, understand the risks and make a balanced decision knowing we’ve done our best in the circumstances.

References:

The Charity Commission (2020). The future for charities can’t be guaranteed if today’s challenges are not met.



The Charity Commission. (2020). Trust in Charities 2020 — overview of findings.

Business Roundtable (2019) Business Roundtable Redefines the Purpose of a Corporation to Promote ‘An Economy That Serves All Americans’. Accessed 25th Jan 2021.

Globe news wire (2020) 90% of S&P 500 Index Companies Publish Sustainability Reports in 2019, G&A Announces in its Latest Annual 2020 Flash Report. Accessed 24th Jan 2021.

Nesta (2020). Better together: how start-up and the third sector can collaborate.