The dramatic demise of UK charity Kids Company isn’t the only trouble afoot in the non-profit sector. Earlier this year a group of the UK’s most highly regarded charities, including RSPCA, Oxfam, NSPCC and Save the Children, were damaged by a scandal around unethical fundraising techniques. The League Against Cruel Sports faced criticism by the Times and the Daily Mail last month for allegedly spending a £3.5m bequest on pay rises, private prosecution and international travel. I’m sceptical of the idea of a ‘crisis in the sector’, but as larger charities and non-profits begin to resemble corporations, it’s essential that they don’t engage in stereotypical corporate misbehaviour.
This isn’t a beat down of course. In any company’s CSR program, it’s often charity partners out there executing programs, or providing the invaluable expertise that makes projects possible. As the public sector shrinks in many countries, the burden of dealing with societal problems increasingly falls to charities. An effective, professional and accountable third sector has never been more crucial.
So what’s to be done? ‘Impact for Change’ is our shorthand for the idea that the organisations able to understand their impacts, and successfully map them across their value chains, are the ones able to make the most difference. We’ve developed this idea within the context of corporate sustainability. But the same is true of non-profits. This is especially true given the increasing tendency of corporate funds to invest strategically in charities, and look for evidence of a clear social return. In today’s business world, charity money is no longer philanthropic ‘play money’. This is a new reality that one might hope would encourage greater accountability and measurement those charities that wish to be successful.
The current model – a compliance-driven, top-down approach sometimes involving oversight by regulators and a board of trustees – is creaking. In the UK, the Charity Commission is a well-intentioned body, but with more than 180,000 charities on its books, it’s ill-equipped to act as sole watchdog for the entire sector – as proven by recent events. The US lacks a government charity watchdog altogether, meaning charitable organisations and private foundations are subject to oversight only by a handful of non-official watchdogs and the IRS.
As ideas like effective altruism gain currency amongst decision-makers, fund managers and the wider public, it’s no longer effective simply to be a charity with a great story and no measurement of impacts, and neither is it ethical. The leading charities of the future will be those that are able to account for what they do from the bottom up, report comprehensively, and win support based on their social – as well as emotional – impact.
Corporate Citizenship manages LBG – the global standard for measuring corporate community investment. To find out more about how you can use the LBG framework to effectively measure corporate community investment and its impact, as done by 220 companies around the globe, visit the LBG website.