Increase charities’ diversity data reporting requirements, Commission told

04 Jul 2022 News

Charities and campaigners have written to the Charity Commission, urging it to require voluntary organisations to report diversity information about their senior leaders and trustees.

Some 65 organisations including New Philanthropy Capital, Reach Volunteering and Charity So White, signed a letter today criticising the Commission for “decid[ing] to do nothing” to tackle the voluntary sector’s “massive diversity problem”.

Publicly available information on the diversity of charities’ leaders is “often incomplete and out of date”, the letter to Commission chief executive Helen Stephenson says, and lags behind the public and private sectors.

The letter, written by Black, Asian, multi-ethnic and refugee-led charity Money4YOU, called on the regulator to require all charities to include standardised data tables on the diversity of their board and senior leadership in their annual return.

‘Incomplete but bleak picture’

The letter said the charity sector’s diversity problem is most evident at senior management and board level.

It quoted the Charity Commission’s own research from 2017, which estimated that about 92% of trustees were white and two-thirds were male but it said there was a lack of more recent data.

“What proportion of funding is being allocated to organisations led by people of colour? What proportion of charities are led by people with lived experience in their areas of work? How many women-led charities exist? How many disabled trustees are there?” the letter asked.

“The available indicators paint an incomplete but bleak picture, and ultimately, unlike in the public sector and under new Financial Conduct Authority (FCA) rules the private sector, we just don’t know.”

Reporting requirements would ‘boost public trust’

The FCA rules CP21/24 (gender and ethnicity) require listed companies to disclose numerical data on the gender and ethnic diversity of their board and executive management.

Money4YOU recommended that the Commission should introduce similar requirements for charities, whereby they are asked to produce percentages to ensure that individual trustees’ protected characteristics are not identifiable.

It said there should be a ‘Not specified/prefer not to say’ option that will allow organisations to withhold disclosure entirely if they have security concerns or other reasons for doing so.

“This step will strengthen governance across the sector in a number of important ways. It will boost public trust in charities by increasing transparency; give investors and donors the means of holding organisations to their senior leadership diversity commitments, and holding funders to account for the diversity of their funding decisions; enable targeted, effective interventions to address historic funding inequalities; and encourage organisations which do not currently measure board diversity to reflect on their performance in this area,” the letter said.

Carol Akiwumi, chief executive of Money4YOU, added: “The lack of diversity in senior leadership inside UK charities has real consequences for real people’s lives, and we’re not even measuring it properly.”

Commission pledges to consider recommendations

A Charity Commission spokesperson said: “We have met with Money4YOU and Operation Transparency, and look forward to reviewing their letter in full. We appreciate their concerns and will consider their recommendations as part of our ongoing work on this issue. 

“Trustees from a wide variety of backgrounds bring a breadth of experience and perspectives that is hugely beneficial to our sector. We urge charities to ensure the recruitment of trustees is as diverse and inclusive as possible to help ensure the continued excellence of the sector.”

No action on previous proposals

A report commissioned by the regulator in 2017 called Taken on Trust recommended that the Commission should require all charities with an annual income in excess of £500,000 to report the diversity of their board of trustees in their annual return.

It also recommended that the Commission should capture the gender of charities’ trustees in their annual return either in aggregate form or for each individual board member.

Last December, Money4YOU asked the Commission through a Freedom of Information request what they had done to action the proposals in the four years since the report was published.

According to the charity, the Commission said that “no decisions have yet been taken with respect to the issue covered by these recommendations”.

Shadow charities minister: ‘Increased transparency at charities needed’

Labour’s shadow minister for civil society Barbara Keeley said: “A civil society that is thriving and ready to challenge must be representative of the communities it seeks to serve. This is even more the case for senior roles, where for too long we have seen a skew towards appointments of the same kind of figure and the same kind of thinking.

“It is high time that the Charity Commission acts upon recommendations to collect data on protected characteristics among charity trustees and executives. While increased transparency may not immediately lead to meaningful change, it is clearly more difficult to address an issue if we are in the dark as to its scale.”

Meanwhile, Dan Corry, chief executive of NPC, said: “At NPC we strongly believe that transparency and good data help the sector progress and have more impact for good. More data on diversity would help us all understand where we are and where we need to go. We hope that the Charity Commission, under its new chair, will be able to move forward on this agenda.”

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