Dear Fellow #WorldChangers:
How do we solve complex problems? Whatever our approach, we can’t get far without good data. Reliable, complete, up-to-date information is a central part of tackling today’s most complex challenges – from poverty and inequality to discrimination and disadvantage.
That’s part of our core mission: tackling inequality through quality education. Better data means more effective solutions to inequality through tools for financial management and sustainability as well as improved access to information, better education and training, higher impact and great returns on investment.
Our work is centred around equity and access: we light fires that equip and inspire people to be the architects of their own lasting change. Identifying inequalities, gaps in provision, and new opportunities is crucial to making that work as impactful it can be for the problems that we’re trying to solve.
That’s why we are campaigning for better regulatory data in the charity sector. This has to happen now. Low levels of transparency and accountability are a major risk for every stakeholder in civil society, but small charities with fewer resources are hit especially hard by secrecy and in-group thinking.
With the closure of the Small Charities Coalition, it’s now more important than ever to ensure that #SmallButVital charities have a level playing field on which to do their brilliant work.
If you want to see a stronger, more effective, and more transparent charity sector, can I urge you to join the #OperationTransparency movement by signing and sharing the our open letter to the Charity Commission below.
With best wishes and courage for the mission,
Dear Helen Stephenson,
The charity sector has a massive diversity problem. Nowhere is this more evident than at the senior management and board level.
About half of trustee recruitment still happens by referral from existing trustees, according to a survey by the insurance specialist Ecclesiastical from late 2021. The Charity Commission’s own research in 2017 estimated that about 92% of trustees are white and two thirds are male. ACEVO’s 2021 Pay and Equalities Survey found that only 25% of respondents were happy with the ethnic diversity of their boards.
Further, the data that is publicly available is often incomplete and out of date. 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 available indicators paint an incomplete but bleak picture, and ultimately, unlike in the public sector and (under new Financial Conduct Authority rules) the private sector, we just don’t know.
The Charity Commission is well aware of this problem, and yet they’ve decided to do nothing. Their 2017 Taken on Trust report, written alongside the Cranfield Trust, City, University of London’s business school, NCVO and the DCMS, contains two specific recommendations that would have addressed the issue directly. This is what it says:
We recommend that the Charity Commission should capture additional information on trustees:
- Capture information on the gender of trustees. It is apparent from discussion of the survey findings that diversity is an important policy issue, so information on gender is also important. The most straightforward way would be to request this information in aggregate form in the annual return, but consideration could also be given to capturing it for individual trustees.
- Introduce a requirement to report on board diversity in the annual return for all charities with an annual income in excess of £500k.
The Charity Commission
In late 2021 we asked the Charity Commission what they had done to action these proposals in the four years since the report was published. This is what they said:
The consequences of the current lack of diversity are real: they result in poorer outcomes for the communities that we’re seeking to serve. Organisations with more diverse boards are more resilient, effective, and creative. Donors and grant-makers should be able to see whether or not charitable organisations are governed in accordance with their values and that people with lived experience have a seat at the table. Intersectional discrimination in the charity sector is a complex and multi-faceted problem that demands meaningful change on many fronts. Increasing transparency won’t solve the leadership diversity problem on its own, but at the end of the day, you can’t change something that you can’t measure.
We’re proposing that all organisations which file an annual return to the Charity Commission should be required to include standardised data tables on the diversity of their board and senior leadership, including the characteristics currently proposed for reporting by listed companies under new Financial Conduct Authority rules CP21/24 (gender and ethnicity), and also including other protected characteristics under the Equality Act 2010. Like the tables proposed by the FCA, each field should contain only percentages to ensure that individual trustees’ protected characteristics are not identifiable, and should include 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. Our proposal follows a recommendation by Voice4Change and ACEVO towards “better regulation for DEI [Diversity, Equality and Inclusion]” and “strengthened DEI requirements on charity reporting”.
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 charity sector, of all the facets of society, should be at the forefront of transparency and good governance. It’s time for the Charity Commission to step up to its objectives and close the data gap.
Signed on/after 4th July 2022
Letter sent to Charity Commission
Statement of Support
As the UK charity sector adapts to new challenges and opportunities following the COVID-19 pandemic, it is more important than ever to make our recovery work for everyone. We are proud of the way in which civil society has responded to people’s needs, worked closely with both government and the private sector, and found new ways to reach service users during this difficult time.
Trustees play a vital role in charity governance and the Commission’s recent measures to provide additional advice and resources on trustee governance have been both welcome and impactful. However, as the 2017 Taken on Trust report noted, diversity remains low, and there is “clearly a need to promote greater diversity within charity trustee boards.” In this context, we welcome the Commission’s commitment in the 2021-22 Business Plan to improving its use of data.
Efforts to improve data capture and access around trustee diversity are vitally important. Following the Financial Conduct Authority’s policy statement on this issue, we support the inclusion of such data in the Register of Charities as suggested by the #OperationTransparency campaign. This will not only strengthen the Commission’s core public confidence and accountability objectives, but will also facilitate greater insights and swifter innovation at the cross-section of charity governance, data governance, and social entrepreneurship.
Trustee diversity is a complex and challenging area and we recognise that there is more work to do. We are committed to working with the Charity Commission, infrastructure bodies, and others across the sector to ensure that the United Kingdom continues to lead the way in transparency and innovation.
- Charities Aid Foundation – Neil Heslop, CEO
The latest #OperationTransparency panel brings leading voices from the BAMER-led UK voluntary sector together to create a practical vision of diversity data transparency. In this informative, future-focused discussion, we’ll cover the implications of charity diversity data for politics, data privacy, funding allocation, recruitment, and public trust. We’ll also discuss precedents and future battlegrounds on open government data, like the gender and ethnicity pay gaps, beneficial ownership, and grant allocation, to paint a broader picture of accountability.
⏯️ Hold funders and executives to account on equality, diversity and inclusion! Have you ever tried to find out exactly what proportion of funding is being allocated to organisations led by people of colour? Or what proportion of charities are led by people with lived experience in their areas of work? How about finding out how many women-led charities exist or how many disabled trustees there are in the UK?
An interactive panel discussion on how we got to this point, the role of the regulator in these kinds of questions, and how they affect trust and accountability in the sector as a whole.
- ACEVO (27 September 2021). Press release: ACEVO’s Pay and Equalities 2021 report finds a risk of complacency on key governance issues as the sector focuses on recovery from the pandemic, retrieved 4 February 2022.
- Charity Commission (17 December 2021). Response under the Freedom of Information Act 2000: Board diversity reporting requirements, retrieved 4 February 2022.
- Charity Commission (November 2017). Taken on Trust: The awareness and effectiveness of charity trustees in England and Wales, retrieved 4 February 2022.
- Charity Governance Code (2020). Principle 6. Equality, diversity and inclusion, retrieved 4 February 2022.
- Ecclesiastical (3 November 2021). Press release: Trustee diversity a priority for charities, survey finds, retrieved 4 February 2022.
- Financial Conduct Authority (20 April 2022). Policy Statement (PS22/3): Diversity and inclusion on company boards and executive committees, retrieved 11th May 2022.
- Getting on Board; McAuslan, Fiona (26 August 2021). Why board diversity boosts resilience, retrieved 4 February 2022.
- Green Park (2018). Third Sector Leadership 2,000: A Review of Diversity in Major UK Charities, retrieved 12 February 2022.
- I.G. Advisors (November 2021). Digital Fundraising and Racial Justice: Challenges and opportunities for funders and fundraisers, retrieved 4 February 2022.
- Nottingham Trent University, Centre of People, Work and Organisational Practice; Sheffield Hallam University, Voluntary Action Research Group; NCVO (July 2021). Respond, recover, reset: The voluntary sector and COVID-19, retrieved 4 February 2022.
- Voice4Change; ACEVO; Lingayah, Sanjiv; Wrixon, Kristiana; Hulbert, Maisie (June 2020). Home Truths: Undoing racism and delivering real diversity in the charity sector, retrieved 4 February 2022.