NPC's director of research, Martin Brookes, told an audience at arts charity the RSA that the public would have more confidence in charities' achievements if sector organisations were subject to the same level of monitoring as other sectors, such as health and education.
Brookes said there was "little doubt" that the performance of charities varied greatly. An external scrutiny body, distinct from the Charity Commission, could make information about those variations available to donors, and this would give charities more incentive to improve, he said.
"Scrutiny, analysis and assessment of charities to this end are not merely desirable, they are essential," he said. "This proposal is not driven by a suspicion that charities are bad. It is driven by a desire to help them do more good. Charities are an important driver of social change and I want them to achieve more."
He said the body should be a non-departmental public body under the auspices of the Cabinet Office and should report to a newly created House of Commons third sector select committee or, failing that, the Public Accounts Committee.
He said it should work through "influence rather than coercion", but should be characterised by independence, the ability to ask awkward questions and to develop novel solutions.
He said: "Charities in the UK have annual income of around £29 billion. Even a small improvement in average performance would produce substantial returns."
Adam Sampson, director of homelessness charity Shelter, responded to the lecture. He said it was important that scrutiny was both sensitive and useful. He said it should value experimental approaches and even failure, as well as the "repetitive generation of results."
The RSA's chief executive, Matthew Taylor, said Brookes has raised important and difficult issues. "Too often in the charitable sector the road to failure is paved with public donations," he said. "The question is not whether charities should be subject to scrutiny. It is how scrutiny can be developed not as an external and hostile imposition but as something which the sector sees as a valuable tool to improve its outcomes and public standing."
To read Martin Brookes's speech, click here.