Measurement and scrutiny of the third sector

As I mentioned in passing in a previous post, there’s been significant debate recently about the need for greater scrutiny and to hold charities / third sector organisations to account. It’s not a new debate, and it’s by no means unique to the UK (this is a hot topic in the US also, as you can see here), but has been kicked off afresh largely by a speech by Martin Brookes, head of research at New Philanthropy Capital, at the RSA, which was reproduced in Society Guardian: Measures of Success. It also then featured on the Guardian blog, and in a comment piece in Third Sector (and bits and bobs in the letters pages of both this week).

Brookes’ argument, in condensed form, is as follows: the performance of charities is not scrutinised and assessed (enough), with the Charity Commission only regulating / assessing whether they are ‘legitimate’ charities; this is because a) we don’t care (we’re assuaging guilt by giving), b) we see ‘charity’ as a big homogenous group, c) they are different / on a pedestal, or d) it’s too hard to do; assessing performance matters, because there are social needs to be addressed and limited money to address them; the status quo can’t stay as is; so we need a new, independent institution (alongside the Commission) to assess and improve the performance of charities…..

Reactions to this have been varied. NCVO’s Chief Exec Stuart Etherington gave a very strong critique (close to condemnation, in fact):

"This is a headline grabbing stunt by Martin Brookes, which is a pity as
he is blowing the hard won reputation of New Philanthropy Capital.
There is already serious regulation of charities and considerable
efforts have been undertaken by the sector to improve their performance
in this area. There is not a shred of evidence to support Mr Brookes’

Setting up such a body would be regulation gone mad and would
severely damage civil society in this country and have precisely the
opposite effect of his intentions. I hope that New Philanthropy Capital
will distance itself from such ridiculous proposals and focus on
assisting charities to have the greatest impact for the people they
support and serve."

OK, so I think we know where he stands. More measured (excuse pun) was Adam Sampson from Shelter who, in this comment, effectively said "yes, you have a point, but how it’s done needs careful thought". In a comment under the blog post, Colin Nee of Charities Evaluation Services agrees with the main points (need to improve measurement / performance), but argues that improvement should come from within (skills / training etc) rather than from without (regulation). Others have also tended to agree with the general thrust about performance, assessment and scrutiny, and disagreed more with Brookes’ suggested model. As one letter put it (quoting from memory), "Brookes has a touching faith in the independence of non-departmental public bodies from government", and others too have said that the thought of another quasi-governmental body fills them with dread.

SSE has a keen interest in this area for several reasons:  generally, because we’re part of this sector; organisationally, to provide accountability to funders/investors and to demonstrate the quality and impact of what we do more widely (see outcomes / impact); via the programme, to support  evaluation / measurement amongst SSE students; and, last but not least, because an SSE Fellow set up an organisation, Intelligent Giving, which operates in this space. SSE worked with the New Economics Foundation on its measurement work, and I now use their methodology to introduce evaluation to the social entrepreneurs we work with; this is on the basis that the earlier they can start to think about measurement, and incorporating it into their work, and understand how it works and why its important, so much the better.

[As an aside, it’s interesting to note that Lisa from NEF also had a piece in the same Society Guardian last week, There’s little profit to be made from savings which discusses their work with Camden Council on outcomes-based commissioning as well as the perils of the efficiency agenda. She connects the two by saying that "any longer-term view of efficiency in terms of services for people must
harness the skills and assets of local people, rather than purely
relying on market-based contracting of professionals to "do" services
"to" people"
. Well worth reading and important to boot.]

My opinion on the Brookes-stoked debate? Well, I think performance and assessment is an area of vast importance; not just for charities but also, as we’ve consistently argued, for social entrepreneurs operating across all sectors, in order to demonstrate the quality of what they are doing, prove its impact, and improve their own ways of working. As sector boundaries become more blurred, knowing this information/data and communicating it clearly is all important: for differentiation, for accountability and so on. For those who trade, it is consumers / contractors who will use this information as much as funders/investors.

Whether this requires another public body is more questionable. Funders and (more slowly) individual donors are increasingly demanding evidence / evaluation, and this is only set to continue to grow. Whether consistency can ever be brought to the massive variety of metrics involved, even within sectors, is the big question. NPC’s own techniques (largely brought with them from commercial financial services / Goldman Sachs) have been criticised by some for not being nuanced / cognisant enough of the differences between the third sector and the commercial business sector. And that’s from a position where they currently don’t say whether any charity is "bad", but only recommend those who are "good".

Of all the positions/reactions above, Adam Sampson’s makes most sense to me. There does need to be greater scrutiny, and greater performance assessment. But we should be realistic about the limitations of what such auditing can do; it is rare that any evaluation/assessment gives "the whole story" of what an organisation does / how it operates. Sampson also draws attention to the role of the third sector in innovation, and that recognition of "honourable failure" may be as important as "worthy predictability". This is particularly relevant in our world, where social enterprise is judged a) by its enterprising nature (innovative, entrepreneurial, risk-taking etc) and b) by its sustainable model (earns income, less grant-reliant, endures etc), without any seeming realisation that the two are sometimes in conflict. Such conundrums are what makes this area such a complex one.

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