Regulation with Rosie: Incentives

The Charity Commission's Rosie Chapman on the dangers of incentives.

The start of every new financial year brings a barrage of calls from would-be suppliers pitching their business to charities and public bodies alike. Each successive salesperson seems to offer a better unique selling point than the last.

But some incentives are more dangerous than others. The differences between charities and the commercial sector are perhaps never more apparent than when issues of corporate hospitality are introduced.

Suppliers in search of a contract may offer anything from tickets for headline acts to top seats at sporting events or regular hospitality events throughout the year. To them, this may simply be a matter of looking after their clients, but for charity staff and trustees the issue is more fraught.

Charities' suppliers are paid for their services from a charity's funds, so any suggestion that the firm in question has been chosen because of perks offered has serious implications. What funder, for example, will be happy to provide its usual grant if it thinks a charity's trustees are spending it on contracts from which they directly benefit?

Charity contracts are awarded to a particular firm for a host of reasons, including price, added value or an intimate knowledge of the charity's work. They should never be awarded because regular gourmet dinners or season tickets are part of the package. There is literally no such thing as a free lunch - the charity's fees are paying for this 'hospitality' one way or another.

If you're thinking of choosing a firm for all the right reasons and it offers a little 'something on top' to close the deal, why not suggest instead that it is translated into a reduction of the price quoted for the service? After all, there is more than one way of not looking a gift horse in the mouth.

- Rosie Chapman is executive director of policy and effectiveness at the commission.

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