Civil Society and Monitoring Models

My friend, Chris Zealley, a long-time participant in the third sector as a charity trustee and monitor of that sector, has corresponded with me this past week, mainly in regard to the Charity Commission in Britain.  In a message to Adri Kemps, Secretary General of the International Committee on Fundraising Organizations (ICFO) and Director of Centraal Bureau Fondsenwerving (CBF) in Amsterdam, and me, Chris raised an interesting question: Do the British need a Charity Commission, and if so, do they need the one they have?  He addresses this question in an article he wrote for Third Sector, a weekly charity sector magazine in Britain at the suggestion of its editor, Stephen Cook.

In his editorial on 24 January 2011, Editor Stephen Cook wrote:

Charity Working at the Heart of Society, a policy document from the Charity Commission in 2005, announced that the regulator was intending to take a broader role as a promoter and champion, enabling charities to maximize their impact and encouraging innovation and effectiveness.

* * *

When the commission's policy was revised the following year, the phrase "championing the work of the sector" was replaced by "championing the public interest in charity."  The dissenters were mollified, but have never been entirely satisfied with the widened role of the watchdog.

The purpose of this historical detour is to put in context the response of the umbrellas and representatives have made to the commission's recent consultation about how it should make the ₤8 million cuts to its budget over the next four years. Not to put too fine a point on it, they have treated this as an opportunity to get the commission back in its box.

Their message, broadly speaking, is that the commission should concentrate on maintaining a high standard of regulation and leave it to them to offer advice and guidance to charities.  The unspoken implication is that a slimmed-down commission should relinquish any remaining claim to the "champion" role.

In his message to Adri and me, Chris suggested that there were two main grounds in which ICFO could enter the discussion on a broader and international basis.  The first was the functions carried out by the UK Charity Commission, and how these functions were handled in other countries.  The second was that in the context of the debate regarding the Charity Commission in the UK, ICFO might address how accreditation schemes operating under the ICFO standards, or similar standards, are common in other countries, such as in Europe, Canada, and the US.

While it is my intention to address these two issues in forthcoming posts, what caught my eye in Chris' message to us was his statement that "The main argument must now be to link Accreditation with the huge demand for funds that has fallen on charities through the government financial pressures on people, business and charities, of which many of the latter have been receiving large government funding, now being dramatically reduced."

In our further exchange, Chris and I seemed to narrow part of this issue down to what I think raises an essential question that I think tends to bring confusion to the entire subject of civil society and the nature and role of civil society organizations which I addressed in my earlier post, Government, Civil Society, Charity, and Public Benefit, on 22 November 2009, and my earlier post on Alexis de Tocqueville and Civil Society.  Chris wrote me that the opportunity for new ideas and for reconsideration of old ideas that had been rejected regarding accreditation or monitoring schemes seemed to be opening up in Britain "because a swathe of UK charities have been sustaining their bulging overheads with grants and contracts from Government departments."  To which I responded, "If a charitable organization receives a substantial portion of its income from the government through grants and contract programs, is it really a charitable organization that is part of civil society, or is it just another arm of the government engaged in some form of social welfare on behalf on the government?"

As this discussion between Chris and me was going on, President Barack Obama spoke at the National Prayer Breakfast in Washington, D.C. on 3 February 2011 in which he said:

     Now sometimes faith groups can do the work of caring for the least of these on their own; sometimes they need a partner, whether it's in business or government.  And that's why my administration has taken a fresh look at the way we organize with faith groups, the way we work with faith groups through our Office of Faith-based and Neighborhood Partnerships.

     And through that office, we're expanding the way faith groups can partner with our government.  We're helping them feed more kids who otherwise would go hungry.  We're helping fatherhood groups get dads the support they need to be there for their children.  We're working with non-profits to improve the lives of people around the world.  And we're doing it in ways that are aligned with our constitutional principles.  And in this work, we intend to expand it in the days ahead, rooted in the notions of partnership and justice and the imperatives to help the poor.

     Of course, there are some needs that require more resources than faith groups have at their disposal,  There's only so much a church can do to help families in need  -- all those who need help making a mortgage payment or avoiding foreclosure, or making sure their child can go to college.  There's only so much a nonprofit can do to help a community rebuild in the wake of a disaster.  There's only so much the private sector will do to help folks who are desperately sick get the care they need.  And that is why I continue to believe that in a caring and just society, government must have a role to play; that our values, our love and our charity must find expression not just in our families, not just in our places of worship, but also in our government and in our politics.

 Shortly after his inauguration, President Obama appointed the President's Advisory Council on Faith-Based and Neighborhood Partnerships.   The President asked the Council to focus its attention on making recommendations in the following priority areas:

• Economic Recovery and Domestic Poverty
• Environment and Climate Change
• Fatherhood and Healthy Families
• Global Poverty and Development
• Interreligious Cooperation
• Reform of the Office of Faith-Based and Neighborhood Partnerships.

While it is my hope to address this report in future posts in a way that may be of interest to the international community that follows this blog,  my point here is that one of the assumptions in this report appears to support my concern that if the charity receives significant public funding from governments, it ceases to be a charity, public benefit civil society organization and simply become an arm of the government engaged in some form of social welfare on behalf of the government.

In the section of Economic Recovery and Domestic Poverty in the report of the Council, the Council recommended that the government ease the burden on nonprofit social service agencies by removing barriers to service programs such as matching fund requirements, burdensome reporting and regulations, and slow payments and disbursement.  In explaining the background for one of its recommendations here, the Council wrote:

The non-profit sector employs over 9.4 million workers and 4.7 million full-time volunteers nationally.  This constitutes roughly 11 percent of the American workforce.  With this many employees, it is critical that the federal government provide an adequate response to keep these entities financially secure and functioning.  In recent years, non-profit agencies have had to raise more and more unrestricted private dollars to meet the match requirements, administrative fees, and licensing and permit fees.  Another way to characterize this is that while non-profits are tax exempt, they are paying a "tax" to accept and administer government funds.

Non-profit agencies that operate programs in partnership with federal and state governments continue to experience dramatic cost increases to run these partnerships.  In the wake of current economic downturn, these escalating costs make it difficult to continue current services and extremely challenging to take advantage of funding opportunities.  Many government contracts are structured with the assumption that small non-profits will be able to identify local resources to cover and support the administration of these partnership in an increasingly unstable economic climate.

In our exchange, Chris wrote of a charitable organization in the UK in which the government had cut over 70 percent of its funding.  So, there was a "renewed dependence on old-fashioned Donors [that was ] going to be very suddenly realised!"

The Chronicle of Philanthropy, electronic update of 6 February 2011 noted that despite the fact that more than 50 billionaires announced last year that they would devote at least half of their wealth to charity, few made big gifts in 2010.  Donors and nonprofit officials feared that the economy would slide back into recession and uncertainty about the tax rule would result in a reduction of major giving.  While older donors making large gifts gave to colleges and universities, younger wealthy donors were giving to medical care, human rights, social entrepreneurship, and efforts to improve public schools.  Thus, for example, Facebook co-founder, Mark Zuckerberg, at age 26, pledged $100 million to help overhaul the Newark, New Jersey (U.S.A.) public school system.  The eBay founder, Pierre Omidyar and his wife, Pam, both 43, gave $61.5 million, mostly to their philanthropies, which support social entrepreneurship, human rights, and other causes.  However, Whitney Tilson, a 44-year old hedge-fund manager said that he expected the face of big giving to change with his generation, and noted that:

I can think of no less needy charity than Harvard.  I have to struggle to think of anyone in my age group who has given big money to a traditional charity.

While it is true that alumni tend to give to, and support their alma maters, it is difficult to think of Harvard University as a particularly needy charity with its almost $3.5 billion income for fiscal year 2008, with an endowment valued at $27.6 billion for the fiscal year ending June 30, 2010, with real estate holdings of 4,979 acres, and with more than 323,000 living alumni in the U.S. and in some 203 other countries.

Of course, what is so confusing about this is that we really are not sure what a traditional charity is, especially when the lines between a government socio-economic-political purpose, responsibility, and funding, and the the goals and nature of public benefit charity are blurred. 

As I wrote in my 22 November 2009 post, Government, Civil Society, Charity, and Public Benefit, civil society reflects the complex set of a dense network of civil associations that are said to promote stability and effectiveness of the democratic polity through the associations of citizens' "habits of the heart."  So, we think of civil society as that part of the public square set apart from the State and the market, that is, apart from the political sector and the commercial and business sector.  If nonprofit, public benefit organizations are fulfilling a public function as arms of the government, and are funded in some significant measure by government entities, they are bound by the legal and regulatory schemes set forth by the government, accountable to the government with respect to the use of the monies furnished by the government through grants and contracts, and largely deprived of those charitable impulses of individuals banded together to meet certain defined needs.  Of course, any charitable organization will be bound by legal and regulatory requirements set forth by the government, but the nature and consequences of this legal and regulatory scheme may be more intrusive in the case of a charitable organization which receives funds from the government.

When the lines are blurred between the role of government in society and the traditionally understood functions of charity or civil society organizations, as they are now in many parts of the world, the motivations for civic participation, including the giving of donations and the volunteering of services, are quite different than the motivations for paying one's taxes and participating vicariously as a citizen through some anonymous government bureaucracy to alleviate the hardships of human existence.  It also distances and separates individuals from those in need, or from the general welfare of society, and thus tends to reduce or destroy any sense of community in which we all have a part in alleviating suffering and improving the human condition.  Perhaps, we don't even feel any responsibility toward our fellow human beings, assuming that if there is a need, it is the government's responsibility to address that need.

As I watched this video clip, I could not help but wonder how our  values, our love and our charity must find expression not just in our families, not just in our places of worship, but also in our government and in our politics.

Nevertheless, this then leads to the questions posed by Chris Zealley as to the efficacy of the model presented by the Charity Commission in the UK as a non-Ministerial Government Department with certain regulatory powers, and the model for accreditation similar to that followed by the national monitoring agencies that are member of ICFO.  This will be the subject of future posts.