Charities talk a good game about giving more voice to their beneficiaries. But for the most part, that’s all it is – talk.
There was more talk of this kind at the International Fundraising Congress this year. During a closed session, some senior fundraiser or other (Chatham House Rule, so no names) declared that INGOs needed to move to a system of "direct democracy" by beneficiaries.
Were it to happen, such a move would completely upend charities’ traditional programme delivery and governance model. But before it could happen, there would need to be a complete change of mindset among many in the charity sector, including a lot – maybe most – fundraisers.
By calling for direct democracy by beneficiaries, the fundraiser at IFC is talking about a different model of accountability to beneficiaries. Accountability, in a nutshell, means ensuring you do what you say you are going to do and if you do not, explaining why not to some person or group charged with representing that stakeholder group's interests.
Beneficiaries are only one of a charity’s stakeholders, and while it really ought to be obvious that they are the most important stakeholder, they are far from the most powerful. That ‘privilege’ falls to donors. And because donors of all stripes – major, individual, statutory and institutional – hold most power, it is they who demand, and receive, greatest accountability.
Many fundraisers are proud of the levels of accountability they accord their donors. Yet some also deny that they owe any degree of accountability, including a moral accountability, to their beneficiaries (I’ve been party to these discussions).
The new charity code of ethics proposed by NCVO earlier this year – billed as the charity sector’s Nolan Principles – literally states that charities should put "beneficiaries first": "The interests of the people [charities] work for should be at the heart of everything they do."
One fundraiser on the website the Critical Fundraising Forum said being beneficiary centred was fine for charities generally, but fundraising was a "different story", because fundraisers focused on donors.
The way my think tank Rogare operates is to try to understand things in terms of underpinning theory, and we can use something called Principal-Agent Theory to explore charity accountability. This is when one stakeholder group appoints an agent to act in their interest. Some scholars use Principal-Agent Theory to explain – and argue for – greatest accountability being to donors. It’s also been used to explain how regulation of fundraising works.
The Fundraising Regulator has many times stated that its role is to act in the interests of donors and the public. As the stakeholders with most power, donors have someone (the regulator) to act in their interests when fundraising goes wrong (as they see it).
When fundraising goes wrong from the perspective of beneficiaries however – perhaps those representing donors’ interests have prevented charities making necessary investments in fundraising (overheads!), or charities have stopped contacting donors because someone has told them they can’t do so without their consent – there is no-one to speak for beneficiaries’ interests.
The greatest failure of beneficiary accountability occurred for all to see earlier this year in the safeguarding scandal: the least powerful and most vulnerable stakeholders had the fewest and poorest systems of accountability in place to protect their interests.
Providing more accountability comes with a concomitant loss of autonomy. Transferring some of that power to beneficiaries is the shift in thinking charities will need to make.
But any new accountability that charities extend to beneficiaries raises extra challenges for fundraisers, since they will now have to decide how to balance what might be competing accountabilities to their donors and beneficiaries. Rogare’s theory of Rights Balancing Fundraising Ethics is a good starting point.
But the first barrier to dismantle is the mantra used by those who take a Principal-Agent perspective in representing donors: ‘What’s best for donors is best for beneficiaries.’
Because you only need to think about this for a while to realise that it ain’t necessarily so.
Ian MacQuillin is director of Rogare, the fundraising think tank at the Plymouth University Hartsook Centre for Sustainable Philanthropy