Charities must be prepared to be open not just about costs, but about what they have achieved, argues Tris Lumley.

Transparency is a hot topic. Companies’ chief executives and boards are under growing scrutiny from the public, governments and the media. The US response to the Deepwater Horizon oil spill demanded “complete, ongoing transparency into BP’s claims process”. The expenses scandal resulted in the establishment of the Independent Parliamentary Standards Authority. UK public spending data was recently published in full through data.gov.uk for the first time.

What does any of this have to do with charities? They are regulated by the Charity Commission, so surely further transparency is purely optional? Should charities be more transparent about their chief executives’ expenses and salaries? More consistent about publishing overhead and fundraising costs?

I believe charities must act now to embrace transparency. But not transparency about costs, which tell us little about what’s most crucial – what charities actually achieve.

Massive public spending cuts have been announced, and charities will be hit by a perfect storm of increasing demand and reduced resources. Government grants will all but disappear. Public service delivery contracts will get more demanding as funders want more for less. Voluntary income will be scarcer. People will expect ever greater scrutiny of charities, just as they do of businesses, politicians and public services. All these pressures will combine to make a charity’s ability to communicate results critical to its chances of thriving, or surviving.

Transparency about results really matters. Unfortunately, it’s also what charities are least ready, or able, to be transparent about. Charities are getting better at measuring their results but on the whole, progress is slow. It’s much easier to be transparent about expenses than it is about what charities actually achieve.

 

 'Are you certain that your charity will not be the subject of a future scandal? If you are not, what can you do now to be more transparent about what’s important – your results?' 

 

Picture the following situation, which I hear reported in charities across the UK. Someone within the organisation is pushing for greater transparency, arguing that they will connect better with supporters if they are more open. The CEO and board are not convinced. They believe transparency means risk – of their reputation being damaged, of seeding doubt among trusting supporters, of giving competitors a stick with which to beat them.

Charities exist to fulfil charitable purposes – to steward, attract and deploy resources for the benefit of others. But they also receive financial benefits and a special status in society because of this public benefit. Charities have a fundamental responsibility to their beneficiaries; to communicate to them how well they are doing.

I asked Robert Longley-Cook, one of the architects of WRVS’s significant efforts to investigate and communicate its impact, whether he had seen negative effects from greater openness about the charity’s weaknesses. The answer was quite the opposite: admitting challenges often had quite a disarming and positive effect.

I’ll leave you with a question. Are you certain that your charity will not be the subject of a future scandal? If you are not, what can you do now to be more transparent about what’s important – your results? If you are sure it won’t be you, what can you do now to make sure you’re on the front foot if a scandal hits, rather than on the back foot, vulnerable because you haven’t yet embraced transparency?

You may agree with what I’m saying but not know where to start. But there are organisations who work with charities to help them measure and communicate impact. The more this happens, the more we’ll be able to see whether charities can take supporters with them as they embrace transparency. 

Tris Lumley is head of strategy at New Philanthropy Capital