In light of a succession of high-profile scandals, Jay Kennedy asks, could civil society be next?

The last few years have seen damaging ethical failures in the most powerful institutions in our society – first the banking sector, then the political class and most recently the media.

Mainstream journalists are sniffing around for the big charity scandal to round off the collection of catastrophe, but I’m not convinced the sector is next in the queue. There will of course be governance, ethical and even criminal failures in some charities. But even the largest charitable organisations – a tiny minority of around 170,000 overall – don’t operate on the same scale or have anything like the same power and financial assets as our major financial, political and media institutions. If power corrupts, then less power should mean less risk of corruption.

Moral foundations

Further, compared to loophole riddled corporate regulation, byzantine MPs expenses rules, murky party funding procedures and the apparent lack of any robust regulation of the newspaper industry, charities in the UK are comprehensively regulated.

But most importantly, charities are set apart from other institutions by their moral values. It’s about what stakeholders and beneficiaries expect a charity to be, and accountability - not just in regulatory terms, but in everyday life to real people. You cannot successfully set up and run a charity without beneficiaries who need and accept its help, or volunteers who believe in the cause – even if the only volunteers are the trustees.

Unlike banks or corporate news organisations, charities are driven by a social mission. Any diversion from that mission is clearly wrong on several levels. A profits-above-all-else attitude should be anathema to any healthy charity’s culture, whereas it is considered acceptable or even desirable in many companies. Though this ethical dimension is intangible, variable and not universal, arguably it is why there is less systemic risk of a moral collapse happening in the voluntary sector as we have seen in other areas.

I don’t want to suggest that charities’ moral values somehow inoculate them from the human foibles that have so devastated other institutions – namely greed, self-interest, and lust for power and control. They don’t – and it would be irresponsible to assume otherwise. In fact, the current financial pressures facing many charities mean there is more risk that those values could be corroded over time, if they are not consciously nourished and supported. Vigilance is needed.

Tough questions

For fundraisers and fundraising charities, maintaining a focus on ethics and values is all the more important when pressure to bring in cash is intense. It stands to reason that as money becomes harder to acquire, there is more pressure to act less ethically to acquire it. In a sense, the need to raise money to support the cause is the weakest link in an otherwise pretty robust suit of charitable ethical armour.

There are any number of ethical dilemmas and permutations to consider. Should environmental charities accept donations from oil companies? Should religious charities apply for Lottery grants? Should international aid charities accept grants from a foundation whose assets are invested in companies that exploit third world labour? Should campaign groups take government contracts from agencies they campaign against? Should any charity have accepted proceeds from the last edition of the News of the World?

My instinct is to answer ‘no’ to most of those questions, but it’s not that easy – ethical questions might appear straightforward on the page but are likely to be a lot more complex in reality. Conscience and principles can be expensive – not just in terms of money but what you can achieve with it. When deciding what’s morally preferable, the real question is likely to be: how much moral compromise is too much?

Taking control

At the Directory of Social Change we’ve wrestled with these issues too. Rather than a statement of policy, we came up with a series of questions we use to interrogate any funding opportunity. These include things like: has it been tested against our vision, mission and objectives? What impact do the activities of the funder or donor have on our ability to meet our vision, mission and objectives? Would it critically limit our independence? Is this how we’d do it if it was our money?

Many ethical questions are not given to clear cut answers, and multiple perspectives will have moral validity. The important thing is that the organisation makes a conscious and regular effort to consider such issues fully, and that this is embedded throughout the structure and processes of the way the organisation works – from the board to the management, staff and volunteers. It’s when that doesn’t happen that we are most at risk of losing our way.

Jay Kennedy is head of policy at the Directory of Social Change

This article first appeared in The Fundraiser, Issue 8, August 2011