The launch of the Fundraising Standards Board to oversee the self-regulation of fundraising is welcome. However, much more needs to be done to reform the way in which the sector operates. A great many charities do a wonderful job, but the sector scores badly when measured against established consumer principles, such as informed choice and accountability.
The effectiveness or 'value for money' of individual charities is difficult to compare.
The new scheme is limited because it covers only the fundraising part of the supply chain. It won't help donors or funders compare how well their resources are being used, nor will it do enough to promote accountability.
Given the proliferation of charities, choice is not an issue - informed choice, however, is a different matter. Performance metrics that enable objective evaluation of performance are still being developed and are not yet widely used by the public, major donors or other funders. The result is that competition is not having the same dynamic impact as it is on other consumer sectors.
Charities play a special role in society and many will balk at the idea of applying mechanisms more usually associated with the private sector. But as the delivery of Government policy is becoming increasingly devolved to charities, they owe a duty not only to their donors, but also to their beneficiaries and to the wider public interest.
Society has the right to expect the highest standards of governance and effectiveness.
Information and transparency are crucial to reforming the sector. The aims should be to encourage greater accountability and fair and transparent practices, to help donors and funders make informed choices and monitor how well funding is being used, and to promote operational efficiency and competition so that donors and funders are confident of getting high 'returns' on their investments. Resources should get to those who need it most through the charities that are best at meeting consumers' needs.
Accountability can be improved through a combination of better statutory regulation by government and self-regulation. Market forces will increasingly be provided by independent analysts producing comparative analyses of how well the sector is performing. The objectives outlined above are ambitious and will be resisted by some in the sector, but it's time for a change.