In a letter to sent to NCVO members before its annual conference in London next week, Etherington sets out what he sees as the major challenges to and opportunities for voluntary sector organisations.
The letter says the Charity Commission is registering new charities at a "prodigious rate", as is the regulator for community interest companies.
It says: "I am in no doubt: I think people getting together to start charities is a good thing – such initiative helps to keep our sector fresh and evolving. It is not the role of the regulator to fetter them."
Asked to expand on Etherington’s comments, an NCVO spokesman said it was sensible for the commission to give applicants advice, including about existing similar charities, but there was a difference between giving people appropriate guidance about the responsibilities involved in setting up a new charity "and looking like you are against the founding of new charities".
"New charities help to keep our sector full of innovative ideas and we should be welcoming and encouraging them," the spokesman said. "The commission is stretched at the moment, but the answer isn’t to dampen people’s enthusiasm to join our sector."
The views are in contrast to those expressed by Sam Younger, the outgoing chief executive of the Charity Commission, who said last month in his final public speech in the role that too many people set up new charities without establishing whether there was genuine need or whether other charities were already doing similar work.
Etherington’s letter says his focus is on "securing the voluntary sector’s reputational future" in the face of growing public scrutiny of the sector.
"Although it has often been uncomfortable, I cannot tell you that I think there is anything wrong with this in principle," he says. "It is right that organisations in receipt of billions of pounds from the public, whether through donations or public contracts, are scrutinised. I would hope that such scrutiny is exercised responsibly and fairly, and it is unfortunate that this is not always the case.
"But in today’s world, with evolving expectations and the quickening churn of online media, all organisations are subject to ever greater analysis, and we must be able to deal with it effectively and with integrity."
He says that charities must find it within themselves to deal with this scrutiny, even or especially when it is difficult.
"We cannot look to anyone else to help us," Etherington writes. "I believe that a mature voluntary sector sorts out its own problems and supplies its own solutions."
He says that the NCVO will publish for consultation recommendations about charity campaigning and influencing, "so we can ourselves set the gold standard in engaging with decision-makers and the public".
This, he says, will help charities ensure their "integrity and their political neutrality is beyond question".
Etherington says that charities should report any instances of poor practice within the sector.
"We should remember that we are each our brother’s keeper," he says. "If you see poor practice in our sector, though I hope it’s a rarity, I urge you to say or do something about it. Better that you do so from a position of kindness than someone else does from one of hostility."
Etherington’s letter warns against thinking a new government after the next general election would mean higher levels of public spending on the voluntary sector.
"If anyone imagines that a different administration next year means the public spending tap will be opened up, I’m afraid they are mistaken," he says.