Future Proofing Non-Profit Boards (Transparency)
The media were having a field day. This particular high-profile charity foundation was in freefall and top it off, Chief Executive Officers were coming and going more frequently than a Tiger Woods transgression. It was claimed that the Board of Directors, while presenting a united front in public, were privately scathing about the administration of the charity. One such cartoon perhaps summed it up best… a father was reading a book to his young son, the title of the book was that of Robin Hood. The son asks his father, “How much of Robin Hood’s money went to fundraising expenses and campaign contributions and how much actually went to the poor?” The father looked perplexed.
In the lead up to the media frenzy, the latest report at the time assessed that 29% of the Australian population considered most charities as trustworthy. By the time the next market research report, prepared by the Australian Charities and Non-Profits Commission (ACNC) had been made public, the percentage had dropped to just 20%. Yet other than non-compliance by this foundation with some provisions of the Fundraising Act in regard to submitting annual accounts in a timely manner, it had not been found guilty of any unlawful conduct. Unfortunately, that much of every dollar had purportedly been spent on administration and the cost of lavish fundraising events was the killer blow as far as the public were concerned. Significant trust and confidence issues had spread through the sector, and as a consequence the transparency of charities was coming under increased scrutiny.
Transparency is gold. That this particular charity foundation continually refused to release its full set of annual reports and its eventual downfall, is testament to that. Not that the foundation necessarily could have been ultimately saved, but transparency in an organisation is linked to trust and as each failing becomes exposed, so too does the increase in public demand for transparency. Certainly, that a charity has a high-profile team behind it does not guarantee effective governance and sound financial control.
Consequently, future-proofing an organisation has become more of a necessity than a choice. Hugh Strickland of Citizens Advice asserts that with more and more scrutiny over charity funding, the best charities can do is “demonstrate their impact – whether that is savings for public services or outcomes for individuals they help”. Amy Brettell, head of charities at Zurich Insurance, concurs. She believes it’s a real opportunity for charity groups “to demonstrate competence, integrity and trustworthiness,” and adds that it could give the sector the credibility and public trust it deserves, and ultimately “serve as a badge of quality”.
In public relations circles, and as the charity foundation encountered, nothing can be more challenging than crisis and issues management. How the charity organisation is seen to deal with a crisis can be critical to its ongoing success. Indeed, stakeholders and the public can lose faith rather quickly if it is the focus of troubling media attention. Jane Johnston and Clara Zawawi in their Public Relations text Theory and Practice recommend firstly planning for a crises, in that ensuring the organisation practices are legally compliant, carrying out a risk audit, creating a procedure/protocol and designating a spokesperson ‘through which all information should be channelled for consistency and cohesion”. Crucially, Johnston and Zawawi deem that organisations have “an ethic responsibility to be candid about their operations, particularly when something goes wrong”. Undeniably, transparency is fundamental to the cause.
In the meantime, in the Internet era, charity assessment websites have attempted their own benevolent transparency monitoring, stating they are “filling a gap” that the ACNC is not delivering. Essentially this is by using the national charity regulators own data and from that of charities themselves and thus grading them for public scrutiny. However, candour is not so cut and dried, and the ACNC has continued to caution against using “narrow interpretations of the data on the register,” warning that “generally, single metrics are a poor guide to a charity’s effectiveness and can lead to unfair assessments”. In essence, with over 60,000 charities registered in Australia, the small amount of charities that have been rated in the way demonstrates their lack of any real penetration. Ironically, one such website itself not only requests donations, but also realises that its own model of “an entirely volunteer-run organisation is not sustainable in the long-term and should not be taken as a model for the industry”.
Essentially most Australians have engaged the charity sector within the past year, with “three out of every five” (ACNC) firmly believing there is a need for transparency around how charities use and adopt related resources. With the steady turnover of Governments, media debate, inquiries into fundraising processes and ever-increasing pressure for greater transparency, there are many challenges ahead. Being accessible is the leap of vision necessary, particularly if charities are to engage public understanding and support, and ultimately bring their stakeholders with them. In the words of Director Katherine Tyler Scott, “Having a busy, hardworking Board means little unless what is keeping it busy are the core issues linked to the identity, performance and survival of the organisation”… and perhaps the penny has dropped that despite the best of intentions, costly fundraising events involving extravagant socials are fast becoming a thing of the past.