Public Trust & the Charitable SectorTo date, Canada’s charities—unlike many other institutions—have maintained high levels of public trust.1 Leaders of charities, however, need to be aware that this situation could change at any time. Charities are facing increased scrutiny from both the media and the Canada Revenue Agency (CRA), particularly in the areas of fundraising and financial management. Donors also expect greater transparency and accountability from the charitable sector. Moreover, given the speed of communications today, even one scandal can negatively affect the reputation of the charitable sector as a whole. In response to these concerns, Imagine Canada recently revised its Ethical Fundraising and Financial Accountability Code and has started to engage the charitable sector in a discussion about the value of other standards. Public Trust The Muttart Foundation study also uncovered a desire for greater scrutiny of the charitable sector. Over 90% of Canadians believe that someone or some organization should pay closer attention to the way charities spend their money. Over 80% think that someone needs to pay more attention to the way charities raise money and to the amounts they spend on fundraising and programs. Canadians also have extremely high expectations around the use of donations. For example, while 60% recognize that charities have operating costs, 39% felt that their full donation should go to the cause. Compared to statistics from other countries, Canada’s trust levels are impressive. In the United States, a poll conducted in 2006 found that only 30% of Americans believe the nonprofit sector is “on the right track” while 32% believe it has “pretty seriously gotten off in the wrong direction.”2 A 2007 poll from the United Kingdom shows that charities only have a 42% trust rating, a drop of nine points in less than a year.3 Although these results are likely linked to major scandals in these countries, they suggest what could happen in Canada under similar circumstances. The Ethical Code In 2006, Imagine Canada decided it was time to update and revise the Ethical Code. The revision process included a series of consultations with charities across the country, a survey, and research on how these issues are managed in other jurisdictions. A revised version of the Ethical Code was released in October 2007 and the new Ethical Code Program was launched in January 2008 with a much greater emphasis on accountability.4 The Ethical Code Program is a donor assurance program aimed at helping to maintain public trust in the charitable sector. Program participants are eligible to use the Ethical Code trustmark, which signals to donors that they comply with the Code standards. Compliance is monitored through a complaints-based process—donors or members of the public can file complaints against charities participating in the program. Charities are encouraged to settle complaints directly with the donor, but if necessary the complaint can be adjudicated by the Ethical Code Committee. The Ethical Code Committee is an independent body made up of five people with expertise in this area. To participate in the Ethical Code Program, a charity’s board of directors must review and adopt the Code. This is an important step that can both increase board members’ understanding of ethics and give them a framework for decision-making. The Ethical Code Program is designed to help the sector maintain public trust, but it must go hand-in-hand with education on good practices. Unethical behaviour by charities often results from lack of knowledge rather than intentional misconduct. The Code can provide guidance on what is and is not appropriate, especially for small charities that have limited capacity in this area. It’s also clear that the public has many misconceptions about fundraising—in particular around how much money charities should spend on fundraising. Educating the public about how charities operate and what it costs them to do business is crucial to maintaining and building public trust. Are Broader Standards Needed? Conclusion About Don McCreesh
1 The Muttart Foundation. (2006). Talking About Charities 2006. Edmonton, Alberta: The Muttart Foundation. 2 Harris Interactive (2006). While a Third of Adults Think the Nonprofit Sector in the United States in Headed in the Wrong Direction, a Vast Majority of Households have Donated to Charities in the Past Year [Online]. Website: http://www.harrisinteractive.com/harris_poll/index.asp?PID=657 3 Magee, Katie. (2008). Charities rapidly losing the general public’s trust [Online]. Website: http://www.prweek.com/uk/news/article/798253/public- 4 Imagine Canada’s Ethical Code is complementary to the Association of Fundraising Professionals (AFP) Code of Ethics. AFP’s Code sets standards for individual fundraisers whereas the Imagine Code sets standards for charities.
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