Charities must "show their worth" to the public and to their supporters, Lord Hodgson said at the launch of his review of the Charities Act 2006.
Speaking at the event in London, the Conservative peer, who has spent the past eight months working on his report, said that being open with the public was vital to increasing trust and confidence in charities.
He said his review had shown that charities arouse strong views in supporters and that people have "huge psychological and emotional connections to the charities they support".
"If you are a charity, you need to show your worth from time to time and not simply rest on your laurels," he said.
Hodgson said he hoped his suggestions would be like barnacles being removed from the hull of a ship, thereby improving its speed.
But he said he was conscious that not all his conclusions would be welcomed by everyone.
Speaking at the same event, Nick Hurd, the Minister for Civil Society, said his two main priorities when considering the report’s findings would be how a recommendation would make running a charity or voluntary organisation easier, and what it would do to help the public have better trust and confidence in charities.