Charities and ethics

One of the real pleasures of having worked with charities for the best part of three decades, first as a junior member of staff at the Charity Commission and more recently as a lawyer in private practice, is that I work with people who know they are doing good.  Whether they are charity trustees or staff, it is obvious in almost every case that they find real and justified satisfaction in the work that they do and are highly motivated and a delight to work with.  As an additional bonus for me and my colleagues, our clients are diligent about seeking advice when needed, heeding that advice and provided we do our job properly, then paying us for it.

In some cases, it is clear that the way our charity clients behave is a direct consequence of what got them involved in their charity in the first place.  This is perhaps most evident among our faith-based charities but is noticeable across the full range of the sector, even in those organisations that are struggling to deliver their services in a challenging economic environment.

The ethical conduct of charities has, however, been subjected to some serious scrutiny over recent months and years.  Rightly or wrongly, a large number of charities have come under fire in the media and elsewhere in relation to high-pressure fundraising practices and breaches of data protection rules, reliance on relationships with sponsors involved in fossil fuel extraction, failures to tackle workplace sexual harassment and, perhaps most shockingly, a failure to tackle the sexual exploitation and abuse of vulnerable people by charity staff.

The potential impact of lapses of ethics on a charity is fairly obvious.  People are less likely to feel inclined to support a charity that has been shown to have fallen short of the standards that the public expects from charities.  And potential donors are more aware than ever of the fact that many charities are funded by central and local government and rely on Gift Aid and other tax breaks, and therefore more inclined to see themselves as stakeholders in the sector and entitled to hold them to account.

This all comes at a time when it is becoming increasingly normal for people to make decisions – whether it is about which charity to support or about where to buy clothes or groceries – based, in part at least, on a judgment of how much good (or how little harm) is likely to flow from that decision.  Some of us are willing to pay a bit extra to do our bit for the environment, or to avoid putting profits into the pockets of companies that exploit their workforces.  Buying power is exercised with an eye to the wider implications of the purchase, particularly among younger people and of course also among those who can afford the “luxury” of buying from sustainable or ethically sound sources.

Some prominent figures in the charity world have engaged in commentary on the connection between being a charity and maintaining the highest ethical standards.  This is, of course, not a new phenomenon. The historic legal definition of charity has its roots in the moral and ethical framework of an established Christian church and the sector has been greatly enriched by traditions of charitable activity and giving that stem from other religions that have made a home here.  It is not surprising that faith-based charities provide some of the clearest examples of organisations that practise what they preach, and seek always to conduct themselves in accordance with a recognised moral framework.

Where things get a little more complex is when a largely secular set of ethical values is imposed on a sector that is extraordinarily diverse and does not, in every instance, have a particular need to make itself liked by the general public.  This complexity was highlighted in May this year when the Chair of the Charity Commission, Baroness Stowell, said (at a Charity 2020 event) that:

“…there is evidence of a growing gap between public expectations of charity, of what charity is and means on the one hand, and the attitude and behaviour the public see in some charities as institutions on the other.

…all people expect charities to be driven by purpose, to live their values and hold themselves to high standards of ethical behaviour and attitude.”

On reading this, a few questions popped up in my mind:

• Given the diversity of charities and the diversity of motives behind their establishment, is it realistic or helpful to expect charities to conduct their work on the basis of some moral or ethical framework based on “public expectations”?
• Is the “growing gap” to which Baroness Stowell refers caused just by the charities themselves, or is it also the consequence of journalists and politicians having peddled a concept of charity in which charitable organisations are expected to operate without paid employees, without spending money on generating revenue, without engaging in lobbying and advocacy to get to the roots of the problems that they are seeking to address?
• Is there a danger that, by promoting this view of charities as the champions of some moral code (defined by whom and for what purpose?) we could end up in a situation where organisations that might up to now have been recognised as charitable might now be denied this status on the grounds that they do not comply with that moral code?

Whatever our thoughts on these issues, one effect of the spotlight having been shone on the conduct of charities is that there is a renewed desire in the sector to get things right – right by reference to the values that a charity may espouse, right in the eyes of existing and potential donors and right for the interests of anyone who may wish to place their trust in charity, as a supporter or as a beneficiary.

Doing the right thing, whatever moral code you might adopt, also connects and overlaps to a large extent with legal compliance and with good governance for charities.  On the legal compliance side, whatever one’s views of the current legal system, it is primarily concerned with delivering just outcomes and balancing the rights of different members of society when they might otherwise come into conflict with each other.  And the principles of transparency and integrity are clearly in that part of the Venn diagram where good governance and ethics intersect.

In exploring these issues, I came across a publication by NCVO which many charities may find helpful – it’s a statement of ethical principles for charities and can be found at https://www.ncvo.org.uk/policy-and-research/ethics/ethical-principles.

It makes no claims to be a sacred text or a definitive statement of a moral code that charities must follow, nor a substitute for the Charity Governance Code or for the requirements of charity law, but provides a framework to help charities to carry out their work in a way that is likely to be recognised and accepted as ethical.  As such, it is something I would commend to charities if they have not already seen it.

For further information please contact our charity law solicitors on 01895 207862 or email charities@ibblaw.co.uk.