THE BLOG

Governments Must Do More to Help Charities Earn Public Trust

18/02/2014 22:09 | Updated 20 April 2014

What would the world look like if in the future, as millions are lifted from poverty to prosperity, they gave some of their time and money to charities? We have estimated that by 2030 a rapidly growing global middle class could contribute close to a quarter of a trillion dollars a year ($250,000 billion) to charity by donating just 0.4% of their income (approximately the annual average in the UK). But for this future to become a reality, governments must create an environment in which charities can earn the public's trust.

Unfortunately in too many countries charities face a climate of suspicion and repression. Heavy handed government policy and the politicisation of charity regulation is undermining the trust of the public which is vital in the development of a thriving charity sector and civil society more broadly.

International variation in the levels of participation in volunteering and giving money to charities cannot be explained solely by levels of economic development and security. For better or worse governments have the power to strengthen or erode the foundations on which charities can earn the trust of the public.

Too many governments have created an environment of suspicion in which negative rhetoric erodes public trust and legal and regulatory barriers ensure that it cannot easily be won back. In our new report, Building Trust in Charitable Giving, we explore this negative trend and set out a series of recommendations that should guide governments to build public trust in charities, particularly where economies are rapidly changing.

Excessive reporting and regulation of charities, as seen in Norway and Indonesia, can stifle smaller community organisations which should act as the grass roots for the development of civil society. In countries such as Belarus and Algeria simply registering a charity is so difficult that it is unattainable for most. This means charities are not representative of ordinary people and the potential for small, community focused organisations is limited. It is fundamental that, where governments create a regulatory regime for charities, it is proportionate to the size of charities and to the activities they undertake.

Many countries have also been caught out by the changing needs of charities. As the charity sector in a nation develops the regulation of charities becomes increasingly complex. As a result the need for effective communication between regulators and with charities increases. The Cup Trust scandal in the UK was partly put down to failures in communication between regulators whilst attempts to improve regulation in South Africa have been hampered by poor implementation and a failure to listen to charities.

In Australia, the politicisation of regulation is threatening to undermine public trust in charities. Having only recently come into being in 2012, the Australian Charities and Not-for-profit Commission faces closure after a change in government. Such instability diminishes confidence in the regulation of charities and as such we believe that political consensus must be achieved before such important interventions are approved. To maintain public trust in charities it is important that charity regulators do not become political footballs or battlegrounds.

I am deeply concerned over the growing global crackdown on the ability of charities to access foreign funds. The International Center for Not-for-profit Law last year identified 14 nations where governments were implementing policies to restrict cross border philanthropy. It is of particular concern to note a recent law in Russia which requires all charities in receipt of foreign funds who undertake very vaguely defined "political activities" to register as "foreign agents". Laws which stigmatise organisations receiving foreign funds not only discredit legitimate charitable activities by supplementing existing regulatory requirements that cover all charities, but they also call into question the effectiveness of the entire regulatory architecture.

Finally, it is unfortunate that too many governments have adopted a legal framework for charities that does not reflect traditional forms of giving. Under the advice of Western governments and advisors many of the legal forms and even the language used by governments in emerging economies fail to recognise the informal but vibrant forms of civil society that should form the bedrock on which a charity sector can develop that has the trust of the people it represents. Furthermore, charities operating abroad should be held to account by governments for the extent to which they contribute to the building of trust in a domestic charity sector.

If we want a better world, we are going to need to mobilise the collective generosity of its people. But if governments continue to undermine public trust in charities, the opportunity to engage a new golden generation of mass affluent middle class philanthropists will have been missed.