Charities should be required to report on their impact to the Charity Commission every year, the House of Lords Select Committee on Charities has heard.
At an evidence session in parliament yesterday as part of the committee’s ongoing inquiry into charity governance and sustainability, Dan Corry, chief executive of the think tank New Philanthropy Capital, said such a move would have a "profound effect" on trustees’ relationship with their aims.
At the session, which focused on whether and how charities should measure their impact, Corry told peers that charities should have to include impact information in their annual reports to the commission.
"If you’re a small charity, it could be one or two paragraphs on how you think you’ve done this year and how you’re going to do next year," he said. "If you’re an enormous charity, it would be something more robust."
The change would make trustees more likely to discuss and think about impact in meetings, he said.
Corry added that it was the one thing he would most like to appear in the committee’s final report, which is due to be published in the spring.
Streets told the committee he believed funders should be prepared to be flexible about the outcomes they expected from charities, rather than have fixed expectations.
Funders should ask the charities what results they expected to get from the funding and use this as a way to measure their success, he said.
According to Streets, this would increase the likelihood that "soft outcomes" – qualitative data on how the charity’s work has affected the lives of beneficiaries – would be taken into account.
But the move away from grant funding towards contracting had resulted in charities seeking out simplistic measures that they believed would satisfy funders, rather than focusing on the needs of beneficiaries, he said.
Streets said this was "wholly inappropriate" and "very destructive" for the bulk of small charities, which were dealing with complex areas of need.
Maitland Hudson warned that too many charities were collecting data that they then never used. She said qualitative data could be useful if it was collected systematically, but too many charities were also collecting the wrong types of data.
"The most important thing about feedback is you should be acting on it," she said. "Don’t just collect it and leave it stored in some kind of database. You should be course correcting; you should be looking at the feedback you’ve received and using it."
She said it was up to trustees to ask what the charity planned to do once it had received feedback. She also urged the government not to extend or reconsider programmes where there was clear evidence they were not working.
Naeem said many Islamic organisations, such as the Muslim Council of Britain, the Muslim Charities Forum and the anti-Islamophobia charity Mend, struggled with an "ever-moving and evolving" political attitude to Islam.
"These organisations fall in and out of favour constantly depending on which way the wind is blowing, and that is very difficult for us to navigate," he said.
Naeem said many Islamic organisations, particularly mosques, felt they had been pushed into becoming charities, which sometimes led to tensions about governance.
The committee’s next session is due to take place on 25 October, but the names of the witnesses have not yet been announced.