Organisations involved in the self-regulation of fundraising should rethink systems of accountability to be more accountable to beneficiaries, a review on global fundraising self-regulation commissioned by the European Center for Not-for-Profit Law (ECNL) has recommended.
The new report from ECNL and co-authored by Rogare’s director Ian MacQuillin with Adrian Sargeant and Harriet Day at the Philanthropy Centre, looks into the literature and practice of self-regulation regimes with a focus on fundraising principles, and considers academic models of accountability in non-profit self-regulation. With limited academic attention and available data on fundraising self-regulation to date, the review aims to fill this gap.
It finds many models are based on ‘Principal-Agent’ theory, which sees the regulator body act as the agent of the principal to ensure the intentions are adhered to. In the case of fundraising self-regulation, the principal is the donor.
However, while this means self-regulation is often good at accountability to donors and governments, it means that because beneficiaries lack similar power to make demands of NGOs, there is often a poor level of accountability to them.
The report concludes that beneficiaries are owed a high degree of moral accountability, and that it is their interests that should take precedence.
“We recommend that all involved in fundraising regulation should review their accountability processes, but more than this, rethink what kinds of accountability they owe their various stakeholders, based on the theory and scholarship we have described in this report. We particularly recommend devising a model for beneficiary accountability in fundraising self-regulation.”
Among its other recommendations, the report also suggests considering how the PFRA-model of self-regulating – a so-called ‘common pool resource’ in the context of face-to-face fundraising – could be adapted and applied to other methods of fundraising, and that all self-regulation of fundraising should comply with the five principles of good regulation as set out by the UK Government’s Better Regulation Task Force.
- Proportionality – regulators should intervene only when necessary. Remedies should be appropriate to the risk posed, and costs identified and minimised.
- Accountability – regulators should be able to justify decisions and be subject to public scrutiny
- Consistency – government rules and standards must be joined up and implemented fairly
- Transparency – regulators should be open, and keep regulations simple and user-friendly
- Targeted – regulation should be focused on type problem and minimise side effects.
Lead author on the report, Ian MacQuillin said:
“Self-regulation is not just a matter of a professional body writing a code of practice. These days, the government is never far from the mix and is often a driving force in the background. We now have systems of co-regulation where all sorts of actors – such as ratings agencies and information services – are part of the regulatory mix.
“But those actors are often most focused on protecting donors’ interest. We see this so often with the arbitrary upper limit on admin costs that are – or have been – part of many countries’ standards.
“And while there may be many ‘prudential’ reasons why self-regulatory bodies think their primary accountability is upwards to donors and the public, there is plenty of scholarship that argues for a downward moral accountability to beneficiaries, to ensure they are not harmed by unnecessarily restrictive regulation.”
The full report can be accessed on the ECNL site.
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