Note by Professor Nicholas Deakin (DCH
359)
1. At the Committee's informal meeting on
Wednesday 26 May, Professor Nicholas Deakin told the Committee
that, in his view, public trust in charities in this country was
high but we needed to guard against its falling. One reason, he
said, that it was high was that the sector had not suffered the
kind of scandals which the charity sector in the USA had suffered,
but that did not mean the sector in England and Wales was immune
from that happening in the future.
2. Professor Deakin undertook to provide
the Committee with information about charitable scandals in the
USA and the effect they had had on the charity sector there. He
has now written to Committee staff to do this.
3. He says the basic position is clear and
quotes the following summary from the Brookings Institution:
"Confidence slipped when charities were
slow to respond after 9/11 and it has been battered in past years
by scandals. The news media have delved into lavish spending at
some of the nation's leading philanthropies, improper payments
at the United Way of the National Capitol Area, conflicts of interest
at the Nature Conservancy and the firing of new YWCVA president
and feminist leader Patricia Ireland after just six months of
the job. In turn the stories have sparked legislative investigations
and calls for tighter regulation, most recently from the California
State Attorney General who joined his colleagues in Minnesota
and New York in calling for a new era in charitable accountability
and the legislation to create it. Where the media, Congress, state
attorneys general and watchdog groups are sure to follow."
4. He notes that opinion surveys by the
Brookings Institution confirm that public confidence is declining
"during a period in which confidence in virtually every other
civic institution went up". Brookings' October 2003 survey
is of particular interest: it shows significant public doubts
about "how charitable organisations deliver services, help
people, work and spend money". It concludes: "the public
has come to believe that substantial numbers of charitable organisations
are either not doing well enough or not doing enough good".
5. The full report from the Brookings Institution
is available on the Web at www.brookings.org/comm/reformwatch/rw07.htm).
6. Professor Deakin notes that the same
story emerges from the Aspen Institute's monitoring programme.
Their Philanthropy Information Retrieval Project reported last
autumn on a series of press reports exposing abuses and suggesting
that this was having a significant effect on legacy income. There
is a slightly more optimistic slant in material from Independent
Sector—roughly the equivalent of NCVO. Their 2002 report
suggests that there may have been some recovery in levels of trust
(though this predates the Brookings' 2003 report which, as we
have seen, suggests otherwise): the 2002 report is provided at
CHB 64 (and is also available on the Web at www.independentsector.org/media/trustPR.html).
7. Professor Deakin notes that the US Senate's
Finance Committee is meeting on Tuesday 22 June. Its meeting is
intended to "serve as the basis for consideration of possible
legislation to address governance and best practice in charities."
The Aspen Institute reports that Senator Charles Grassley, chair
of the Senate Finance Committee, "intends to make the IRS
[Internal Revenue Service] more aggressive in overseeing non-profits"
with the objective of installing controls similar to the Securities
and Exchange Commission's supervision of corporations.
June 2004
| 
