Sir Stuart Etherington’s State of the Sector address to NCVO Annual Conference delegates

Sir Stuart Etherington's State of the Sector address, delivered at the NCVO Annual Conference on Monday 18 April 2016.

Good morning, everyone.

I’d like to join Martyn in thanking you for coming to join us here today.

My colleagues at NCVO have worked hard to make sure that you get real value from today, and we very much hope that you will leave feeling equipped to face the challenges ahead.

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These have not been easy times for voluntary organisations. I think it’s worth taking a moment to remind ourselves why we are here.

Voluntary organisations continue to offer a huge amount to our country. Indeed, an ever-growing amount.

We translate the public’s concern for others and for society, into real action to improve lives.

Everyone in this room is here because they care deeply about the causes they work on.

Whether we are paid staff or volunteers, trustees or managers, we have made the choice to do our best to make a difference.

And what you do does make a difference. Every day.

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Nevertheless –

This year has been characterised by a level of concern about charities greater than any I can remember in my time at NCVO.

When too many people appear to have concluded that there is something wrong with modern charity, and that what I can only describe as a more Victorian model of philanthropy is preferable.

When charities have found themselves on the front pages, sometimes because papers wanted to fill some space by kicking charities with flimsy stories. Other times because, let’s be frank, those charities were not living up to their own standards and legitimate questions were being asked.

When there are times we’ve been asked reasonable questions about tough issues – fundraising, senior salaries, campaigning, commercial partnerships – and we haven’t always responded in ways that the public have found satisfactory.

I say this to all of us: too often, I have heard that these are someone else’s problems, that our organisation doesn’t need to change.

Let me be clear. Whatever problems we face, we face them together. They impact us all.

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But my address to you today is not one of despair. It is one of hope. There are challenges in the present and in the future, but I believe we can meet them and even emerge stronger. I want to set out in broad terms some things I think we must do on our journey there.

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The first challenge is that of public trust.

I have frequently spoken, indeed at this conference, with a focus primarily on the sector’s relationship with government.

It is, of course, important. But we should avoid seeing everything through the lens of relationships with the state. We need to take a step back to look at something more fundamental.

Our relationship with the public is by far the most important that we have. Everything else flows from it.

It is time for us to concentrate on that relationship. I worry that it has been taken for granted at times.

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Charities need to be deeply conscious of a number shifts in society. I have set out much of this analysis out before and I think it uncontroversial.

It is too crude an interpretation to talk about ‘hostility’ to charities, or ‘attacks’ on charities – although there are sometimes elements of these.

I do not think that people have stopped believing in charities, stopped wanting to give their time, stopped wanting charities to do the work they do.

But the veil has slipped.

There is an increasing willingness to ask questions. Recent media coverage reflects this.

And when the answers to those questions are themselves found wanting, it only fuels that willingness.

There is a growing trend – an inexorable one, indeed – of greater expectations of openness and transparency.

This genie is not going back in the bottle.

Nor should it. Greater openness is an unquestionable good.

But we must be careful – whereas charities could previously have been seen often at the forefront of openness, we are in danger of being outpaced by the public sector and by publicly listed companies.

We cannot afford to be seen as less transparent and accountable.

We have also seen growing scepticism about institutions. And that doesn’t mean someone else: that means most of us here today.

This trend is something of a double-edged sword.

At its best, it encourages people to question. It encourages authorities and institutions to be attentive and responsive.

It embraces, for example, open government – acknowledging that the policy-maker in Whitehall may know less than the volunteer in Walsall.

But at its worst, it can precipitate short-sighted politics, populism and red-top rule.

If you are running a major public-facing institution, indeed even if you are running a smaller, local organisation, you must be alert to these trends and have a clear idea of your approach to them.

It should be obvious by now that refusing to answer questions, declining to engage, trying to fudge answers, isn’t going to make questions or scepticism go away.

Indeed it will only make them grow louder.

The only way to answer critics is by answering them.

You cannot hope to persuade everyone, but let no one accuse you of not being honest and open.

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So, we need to meet these challenges of greater scrutiny, and to think about how we re-engage with the public in a way that promotes rather than erodes trust.

We cannot be complacent. This is a year in which, very visibly, some things have gone wrong in our sector.

In some cases we have quite clearly fallen short of the standards that we profess to live by and that the public expect of us.

I am clear: The public will not listen to news of our successes, or to the important messages that we have about the issues we work on, if they think that at our heart we are no different from any other big organisation.

I believe the way we live our values can and should make us different from others. But it is not enough to simply say that to the public. We have to prove it by our actions.

We must work to high standards, and be seen to work to high standards.

Fundraising is a clear example of an area where we must demonstrate that we are living our values.

I know many of you are thinking very hard about this, and making some tough decisions for your long-term future.

But there are other areas too.

Questions about executive pay will recur.

NCVO’s position on this is quite clear: it is not for others to tell your trustees what they can and cannot do here, but charities have a responsibility to explain what they pay and why.

This is one just one small element in a greater picture of openness about how we work.

Despite making straightforward recommendations on how charities can be transparent about this, we have seen limited progress so far.

I worry what people think of us when we cannot achieve even this simple task.

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Does having higher standards sometimes mean some extra costs, or some income forgone?

Yes, undoubtedly.

But as well as doing good, we have to do what’s right.

Otherwise we will not merit the status we hold in the public’s eyes. We have tough decisions to make about what we do, and what we don’t do. These must be informed by our values.

We have to show that we are worthy of the public placing their trust in us. Of choosing us when they want to do good.

Because when I talk about losing public trust, let me be clear what is at stake:

We’re not talking about a few million here, even a few billion.

With public faith go donations, status and political faith.

With political faith goes the possibility of delivering many public services to the standard that we know only charities can meet, and above all, the ability and the influence to make a real difference to people’s lives.

It is not a gamble I am prepared to take for the sake of improving margins on direct marketing.

Because who suffers if there is a collapse in trust in the charity sector?

It’s not me. It’s not you.

It’s the people we are here to serve.

So it’s our job to make sure that never happens. My job and your job. And that means acting now.

This is our whole future as a sector I am talking about.

Getting on with the day to day in the same old way is complacency.

We all need to be actively thinking, all the time, about what we are doing to enhance our organisation’s reputation, and our sector’s reputation:

This is the pressing task for the sector now.

And as I have said before, if you see poor standards elsewhere, I urge you to take action.

Because often the public don’t see us as separate entities. Other organisations’ poor practice can affect your organisation’s reputation.

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There is another dimension of trust in us that is important to consider, and which has become more apparent this year.

Amid the proper public scrutiny of voluntary organisations that is now ever present, I am concerned that a less well-meaning band are seeking to question our fundamental legitimacy as voices in public debates.

Some of this is inevitable.

By our nature we are often in a contested space.

On the political right, some are concerned that charities push for public expenditure where they see need.

On the left, some ask why charities should do what they believe the state should be doing itself.

In particular, some are critical of volunteering and the role of volunteers in areas where the state is withdrawing.

These are tricky seas to navigate.

Though, for reference, we will always be ready to advocate for the added value that volunteers bring to public services.

We will also reiterate that good volunteering programmes don’t just happen, they require thought and investment.

But I worry there is a growing notion that charities should be seen and not heard.

That we should stick to some Victorian model of handing out alms.

This is sad to see in Britain, traditionally a beacon of good practice when it comes to the role of civil society.

To move to such a place would be a huge waste of talent, of ideas, of solutions. It would be an affront to those furthest from power.

I am, as you know, particularly concerned about the introduction of the anti-advocacy clause in grant agreements.

This seems to be the government closing its ears to experts.

It will lead to a waste of the money it’s supposedly intended to save.

It is also a clear breach of the Compact.

The very first clause of the Compact says: ‘Government will respect and uphold the independence of civil society organisations to deliver their mission, including their right to campaign, regardless of any relationship, financial or otherwise, which may exist.’

Matt Hancock says, I quote: ‘The clause is compatible with the Compact’.

I don’t see how you can resolve these two statements.

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The best voluntary organisations combine the virtues of the legitimacy that comes from involving supporters, beneficiaries and volunteers, with the authority that comes from real-world insight and specialist expertise.

They can help government craft policy that reflects the real world and that will be effective.

And, yes, from time to time, they say things that are inconvenient to hear.

But listening to, indeed facilitating, such voices, is a part of a mature democracy.

Indeed it is a characteristic we seek to promote to other countries around the world.

Charities are experts, anchored in communities, their contribution to public policy should not be underestimated nor discouraged.

Timely feedback from the frontline can help government to achieve its goals more efficiently, target resources better, and achieve lasting changes that reduce demands on the state.

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I’d like to also touch briefly here on the Charity Commission.

The Commission has undergone significant change in recent years. Largely, I think, for the better.

It deserves our respect for this.

It has become the tough regulator we need it to be in order to secure trust in the sector – taking action at a much greater rate against abuse and mismanagement.

This was a crucial step and the current board have been a driving force in implementing it.

But now the regulator must become not just tough, but also robust.

It should have some faith in its own expertise.

The current governance structure of the regulator was brought in following concerns that the old structure, where the Commissioners as they then were – a small group of lawyers and civil servants – was insufficiently responsive.

They were replaced with a board of political appointees.

This was an understandable reaction.

But ever since, the Commission has been subject to constant perceptions of politicisation, not least as its board have been accused of using their position at the Commission to pursue their political agendas – whether it be on the European referendum or independent schools.

We need now to find a way to end this perception.

A regulator of any kind must be steadfast, not buffeted by the opinion of the day. Not trying to play to the crowd – and certainly not to just one section of it.

This is unbecoming of a serious, quasi-judicial body.

The Commission must be governed by balanced and thoughtful decision-making, not by newspaper headlines.

It is quite possible to be responsive without being reactionary.

In the long term, people put their faith in institutions that are reliable and reasonable.

We should not return to the staid days of the civil servant Commissioners, but the board must be beyond accusations of politicisation.

The Commission must move now from making the point that it has changed by sounding tough, to focussing on running as an effective, reliable and neutral regulator.

I hope we can have some productive discussions about how to ensure this future.

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So. No shortage of challenges.

But the final point I want to make to you is that I know we are capable of dealing with these challenges.

It is less than a year since the Daily Mail splashed on its remarkable investigation into fundraising call centres.

Yet in that short time, we have conducted a major review of fundraising regulation and we have fundamentally changed the regulatory environment.

We have established a new regulator, and it is putting in place the systems that will allow us to demonstrate that we take public concern seriously.

We have shown that charities listen to and respond to criticism.

Alongside this, many of you here have made substantial changes to your own practices in order to show that you believe in following the spirit as well as the letter of the law and in treating your donors respectfully.

These have not been easy times.

These have not been easy decisions.

And I think we should acknowledge that.

Whether we agree or disagree with particular fundraising tactics or policies, particular reforms or not, I think we should all remember that we have been through a challenging year.

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If I may touch quickly here on the Fundraising Preference Service, which I know has been a cause of concern for some.

The cross-party review panel that I led made the recommendation for an FPS, to help people, particularly vulnerable people, to deal with unmanageable volumes of fundraising requests.

I think we have all heard stories from friends and family of older people who have had the experience of receiving requests that they do not feel able to deal with.

I am very pleased to say though that we have seen meaningful strides forwards in the Code of Fundraising Practice since the time that recommendation was made which have significantly clarified the very great importance of appropriate data protections.

These were areas that had been left in limbo for a very long time before our report and where there was not clear evidence that any progress would be made.

We are also getting closer to the implementation of European rules on explicit consent for marketing, and a number of charities are working towards these new standards.

It is up to the new Fundraising Regulator to decide on the final form of the Fundraising Preference Service, but I think would be well advised to take these other protections into account in deciding what a proportionate FPS looks like.

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But let me say this. I am pleased to observe that as ever, the overwhelming majority of disagreements in this sector stem from differences of opinion about what the right thing to do is, not whether to do the right thing.

Recent times have not been easy, but I believe we will emerge stronger for going through them.

As I say, the challenges will continue.

Challenges for us through challenges to us.

Challenges to our practices, challenges to our legitimacy.

Charity boards will need to continue to think clearly about everything they are doing. There are many questions you need to be sure you can answer.

Are we setting the right values for our organisations, and how are we ensuring that they genuinely inform decision-making?

How confident are we that we could happily defend everything we are doing? – And ‘it makes money’ is no longer a sufficient defence, if it ever were.

How are we actively managing our reputation? Not just to maintain it but to constantly improve it. As boards, are we asking the right questions and effectively holding to account our staff?

If there are areas you are uncomfortable about, now is the time to tackle them.

If we are not asking these questions, others will. In ways that will not always be sympathetic.

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NCVO will continue to help charities to strengthen their governance and impact. And we will continue to defend your right to speak out and be a voice for those who would otherwise not be heard.

We will also help to tell a positive story about charities.

Working with our partners in CharityComms and Acevo, and supported by a number of some of the largest charities, we are working on tools to help you deal with these challenges and show that we have good, honest answers to the questions the public ask of us.

Charities must be prepared to answer legitimate questions.

But NCVO will not stand by when unfair attacks are launched.

In the last year we have taken robust action to tackle these, and we will continue to do so when necessary.

We will always defend charities where unfair criticisms are made.

We will always stand up for voluntary organisations and for volunteering.

But we can’t do it alone.

To secure our future we all have to not only believe that we are doing the right thing but go out of our way to show it.

Warm words about the sector have to be backed up by its deeds. By everyone, every day, demonstrating your value, and above all, your values.

Thank you.

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