Opinion

Independence - a legal requirement or a state of mind?

Governance | Neal Green | 17 Dec 2009

Neal Green discusses one of the Charity Commission's most common 'calls to arms' - maintaining charities' independence. 

Charities’ independence is something the Charity Commission is often called upon to defend.

It runs as the key theme in many of our publications, including The Independence of Charities from the State, as well as our guidance for charities with NHS or local authority trustees, and for corporate charitable foundations set  up and funded by private companies.

It’s also a hot issue for charities that deliver public services. Reassuringly, the ‘call to arms’ often comes from the sector itself; recently the  Baring Foundation has been undertaking important work on this. It’s easy to assume we know what ‘independence’ looks like but it’s not always straightforward; it can actually be fairly subtle and complex. For example, what charity law means by independence is that  the organisation must exist solely for charitable purposes, not merely as an administrative arm of another organisation, do its bidding or implement plans and policies. But if that was it, opportunities for arm-twisting that fell short of outright control might be much more frequent than they are.

Fortunately, trustees’ duties make independence stronger than that. Trustees must act solely in the charity’s interests; other conflicting loyalties or financial interests must be declared and dealt  with. Trustees, as guardians of the charity’s mission, are also the guardians of its independence. And of course, charities must produce separate, charity accounts, and not be subsumed into the accounts of some non-charitable entity.

In the real world, it’s no good relying on a theoretical ‘legal’ independence. Managing relations with funders or founders who have their own agendas isvery tough. Pressure gets applied (intentionally or not) in many ways, but often through funding. This is why some commentators advocate separation between charity and state – advising charities to avoid public service contracts, and lobbying for public bodies to be removed from charity trusteeship.

But isolationism never was a viable option; charities must interact with their beneficiaries, funders, regulators and anyone else who is interested, if they are to successfully carry out their mission: ‘No man is an island entire of itself’. Conversely, in relationships where pressure does get applied, some charities might be well advised to ‘sup with a long spoon’. Conflicting stakeholder demands, conflicts of interest and hard decisions won’t go away; for trustees, they come with the job.

Independence needs to be active behaviour rooted in the charity’s mission and values. It means making choices about whether to accept the terms and conditions on offer, and whether to accept the status quo or speak out; effectively managing conflicts of interests (which subtly corrode independence from within if unchecked); and being clear about the interests of the charity – what is negotiable and what is not. As the Baring Foundation has pointed out, this isn’t something passive or static. Sometimes the best form of defence is offence – even if it causes offence, if you’ll pardon the pun. But there’s also a place for diplomacy, discretion and picking your battles.

So what of the future? We know finances, both public and private, will continue to be tight. There may well be redundancies, cuts to services or freezes in funding. Charities may find it harder to get funding from most sources, but will continue to look like an attractive option for service delivery, whatever colour of government. And while funding diminishes, demands on services may increase as economic hardship continues to bite on individuals and families. It is more vital than ever for charities to uphold and exercise proactive independence, clearly focused on beneficiaries’ needs, whether directly meeting them or campaigning for them.

Legitimacy means being able to show that you really speak for the people you claim to represent. And when you campaign, don’t opt out of the democratic process simply because you don’t know how to engage in it – our guidance for charities in this area provides a sound grounding.

Be able to measure whether your efforts are effective, then, when you know you’ve got the right door, keep knocking. And, particularly for controversial campaigns, make sure you record the reasons for your decisions.

It has often been said that one reason why charities are trusted is because they are ‘not the state’. Being able to work effectively with government and the private sector, whilst remaining visibly distinctive from them, is a tricky balancing act. But it is something that charities must somehow continue to do. Remembering who you are really there for – focusing on your beneficiaries and their needs – is essential if you are to succeed.

Neal Green is senior policy advisor at the Charity Commission

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