The traditional two-tier governance structure in the charity sector could have "reached its sell-by date", according to the treasurer of Oxfam.
Speaking at the Charity Finance Group’s large charities conference in London this morning, Bob Humphreys said the traditional governance model of a trustee board and executive team could be incompatible with increasingly demanding regulation of the charity sector.
"The increase in regulation, particularly over the last 12 to 24 months, is starting to call into question the traditional two-level governance model that we have for charities in the UK," he said.
"That model, with trustees that are quite distant and not necessary engaged, doesn’t scan well against the current focus on regulation, on scrutiny and on challenge."
He said: "I do think that some of our models have reached their sell-by date. That philanthropic model of the 19th century really doesn’t scan when you start to look at the depth of scrutiny that is expected now of trustees who are, after all, devoting a relatively small proportion of time on a voluntary basis to charities."
Humphreys said the charity sector should be more open to other models and "shouldn’t accept the status quo to be unchangeable". This includes looking at the advantages that the social enterprise model brings.
He said: "It is becoming less and less clear as to what extent the registered charity ‘kite mark’ represents a significant advantage compared with the additional regulation and restrictions that go with it," he said.
"After all, social enterprises can benefit from the ability to deliver modest investment returns, a one-tier governance structure, they can remunerate their governing body and they are also freer to act in policy areas in which registered charities might not be."
"It seems to me that we need a broad dialogue on regulation and governance to explore how all forms of social enterprise, including charities, can continue to grow and thrive for society’s benefit."
Humphreys also said that while trends towards more coherent regulation, improved accountability and transparency in the charity sector were positive, the sector’s accountability "is higher than it is for commercial companies of comparable size who are delivering similar services".
"That makes me think that we should be arguing for is for the rest of the commercial sector to come up to the levels of transparency and accountability that we are already showing in the charity sector," he said.
Humphreys continued that while public trust in the work charities do has remained high, "what has decreased is their trust in some of the ways we go about our business, particularly in fundraising".
He said: "We can’t bury our heads in the sand over this – but we shouldn’t think that this necessarily a mortal threat. We should respond to these challenges in the way the charity sector does best, which is to listen, learn, improve and move on."