RNIB chair proposes self-regulation for charities 0

Governance | Tania Mason | 17 Nov 2009

RNIB chair Kevin Carey is eliciting support from charities for a new model of charity self-regulation that focuses on performance instead of process.

Carey (pictured) is planning to set up a Progressive Governance Association to try to fathom a new model of regulation for the sector that encourages effectiveness and improved performance. He has already hosted one meeting in London, attended by a number of charities, and is arranging a second in York in December.

Carey, who became chair of RNIB in July after nine years as vice chair and several years on its audit committee, is convinced the sector suffers from a culture of underperformance and that this is engendered by the Charity Commission’s preoccupation with fundraising fraud and accounting errors.

There are so few fundraising fraud cases in the sector as for the problem to be negligible, and audits uncover very few real issues, he said. So regulation of the sector might as well shift its focus to uncovering and fixing underperformance.

Carey said it was obvious that lots of charities perform well below their potential. “Look at the visual impairment sector, for instance,” he said. “It has an annual income of around £300m yet it is still serving fewer than 15 per cent of blind people.”

He said his experience of working at Ofcom and the Advertising Standards Authority had convinced him that “self-regulation that is concerned with outputs is much more important than external regulation that is concerned with inputs”.

“We need to up our performance so we get more for our money,” he said.

"So far we’ve had health and safety, audit and governance – all fads that people got excited about. But we’ve not had one about performance, and that’s the most important of all.”

Public benefit test should be more rigorous

Carey also said a better mechanism was needed for deciding who can be a charity than the current public benefit test. “Public benefit is really just about getting out the annual report – as long as you can prove you have spent all your money pursuing your charitable objects you pass the test. It doesn’t seem to matter how effectively you used that money.”

He said lighter regulation might also spur more mergers, even between charities that support different causes, if these are deemed to be a more effective way of delivering services.

'Self-regulation according to output'

“If a charity is an organisation that does not declare a dividend and its purpose is to generate social gain, whatever form that may take, then surely self-regulation according to output is what’s needed.”

Carey admitted he didn’t know yet what form his new association might take – whether it would be a membership scheme or a campaigning body or how it might be constituted. “But I’d be surprised if we don’t want to take these ideas to government in some form or other.”

He said that in lean economic times such as those that lie ahead, there is no point simply whingeing about lack of resources – “you need to do more with the resources you have got”.

Remunerating trustees

Carey also advocates that the sector should be able to pay its trustee boards without needing permission from the regulator. “I am not telling all charities they have to pay their trustees,” he said. “I am not telling any charity how to run itself – but there are certain things I want done.

“Charities that wish to pay for non-executive expertise should publish what they pay and let donors make up their own mind about whether they want to support the charity. Caveat emptor is good enough the retail sector, why is it not good enough for charity?"

He contends that the sector is "delusional" if it believes the current system of governance, where unpaid trustees have authority over paid executives, really works.