Trusts and foundations have a diversity deficit. Is it time for regulation to fix it?

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As a member of the Association of Charitable Foundation’s working group on Diversity, Equity and Inclusion (part of ACF’s Stronger Foundations programme[1]) I was invited by ACF to write a “provocation” on the topic.  This is it:

As recent reports show[2], most trusts and foundations have a diversity deficit – which is an individual and collective failure.  If you have any doubt about this, the next time you go to a meeting or conference for trusts and foundations look around.  I do – and almost always I find myself asking “Is this what the acceptable face of white supremacy looks like?”

And this lack of diversity is not new.  In an article I wrote for the July 2018 edition of ACF’s Trust and Foundation News[3] I listed a sample of reports from the past 20+ years which repeat the same list of deficits – starting with ‘Meeting the Challenge of Change – Voluntary Action into the 21st Century’ (The Deakin Report) from 1996 which said “Some organisations are too ready to proclaim their virtues as an equal opportunities employer and take the wish for the deed.  Trustee boards/committees should also consider the implications for their own composition.  Too many still reflect the position in the upper reaches of the sector 20 years ago in their membership – they are dominated by middle-aged white male professionals.”

But diversity is not just about the things you might be able to see – eg race, ethnicity, gender, age, disability.  It’s also about diversity of class or sexuality or life experience or way of thinking.  And as another recent report for trusts and foundations shows[4], diversity is really only about numbers.  Most important is moving beyond the numbers by behaving inclusively so that equity is the outcome.  Put another way – diversity should change us and what we do.

Independent Should Not Mean Unaccountable

There is no external pressure or competitive advantage for most (non-fundraising) trusts and foundations to become more diverse.  Few of us have shareholders or external stakeholders to be a source of influence for change and the  communities and organisations we seek to support are unlikely to risk biting the hand that might feed them or be able to take their business elsewhere.

Yet trusts and foundations may be activist shareholders with their own investments – expecting higher ethical standards of the people who manage their money.  We should ask ourselves – what would a responsible investor make of us and the ethics we practice?

Institutional Racism and Other Prejudices

February 2019 will be the twentieth anniversary of the Macpherson report – the result of the inquiry into the police investigation of the racist murder of Stephen Lawrence.  The report details its assessment of the ‘institutional racism’ within the Metropolitan Police and policing generally. Institutional racism, as defined by the Institute of Race Relations, is “that which, covertly or overtly, resides in the policies, procedures, operations and culture of public or private institutions – reinforcing individual prejudices and being reinforced by them in turn”.  

How do you know (not ‘believe’ – really know) that the policies, procedures, operations and culture of the institution you work in or lead are not perpetuating and reinforcing prejudices that result in unfair access, processes and outcomes for others – whether that’s who you do or don’t employ, who you do or don’t fund or who does or doesn’t get to sit around your board table?

What’s the Point of Diversity, Equity and Inclusion?

But the lack of diversity isn’t just a failing of our professed collective commitment to fairness and wanting to do good.  It’s also an opportunity lost.

In my view there are 4 practical reasons for trusts and foundations to make Diversity, Equity and Inclusion real:

  1. we can better understand the needs and capabilities of the communities we are trying to reach if we reflect those communities at all levels (KNOWLEDGE AND EXPERIENCE);
  2. different perspectives are more likely to generate new ideas and innovation – helping us to deliver our mission more efficiently and effectively (EFFICIENCY AND IMPACT);
  3. ensuring diversity and inclusion is part of our commitment to social justice (FAIRNESS AND ENGAGEMENT);
  4. to help promote public trust in the voluntary and community sector generally (LEGITIMACY AND ACCOUNTABILITY).

There are many reports[5] which demonstrate the value of diversity within the commercial/private sector and public sector.  The voluntary sector shouldn’t be so precious as to assume that we require our own evidence base to prove that Diversity, Equity and Inclusion will improve our knowledge, efficiency and impact as it has in other sectors.

In Whose Interest?

Lack of diversity is a reputational risk for individual foundations and for the foundation sector as a whole.  Could it be the trust and foundation sector’s “unscrupulous fundraising” or safeguarding failure PR disaster waiting to happen?

Thinking about recently revealed failures (President’s Club, Oxfam, etc), and the current level of public trust in charities, much of what needs to improve in the not for profit sector (as in all sectors and institutions) is about power:  the inequitable distribution of it and the misuse of it.  Misuse through action (eg the abuse of those with less power) or inaction (eg enabling abuse by others or in order to preserve one’s own power).  Diversity, safeguarding, impact – all would benefit from an audit of where the power is and where it should be.

Actors or Bystanders?

The Stronger Foundations initiative will hopefully provide both resources and a call to action for our sector to improve in this area.  But we don’t have to wait for Stronger Foundations to report.

The first step in making Diversity, Equity and Inclusion real is that we should all take stock of our (individual and organisational) values and our trust’s mission.  The first action that trust staff and trustees should then take is to ask ourselves ‘where do I stand on this?’  The second action is for us to ask ourselves ‘what opportunities do I have to make a change and shift the power?’

It starts with a personal action plan (‘What am I going to do to promote equity and inclusion?’).  Then an organisational action plan (‘How will I influence or lead my organisation so that it understands diversity and promotes equity and inclusion?’).  Then a collaborative action plan (‘How do I use the networks that I and my organisation are part of, or that we should join or create, to promote equity and inclusion more broadly?’).  The key word in all of these is ‘I’.

But after 20+ years of inertia, time increasingly isn’t – and shouldn’t be – on our side to fix this ourselves.

In March 2018 the Charity Commission’s Director of Policy and Communications was reported[6] as saying she was told by charity leaders that charities couldn’t be relied on to fix it themselves and that real change on diversity would only come through regulation and enforcement.

And since before her appointment the new Chair of the Charity Commission has been talking continually about the problem she believes charities have with public trust[7].  And not coincidentally, the Charity Commission’s new strategy[8] – a short document – mentions “public trust” 5 times and states “Yet when it comes to trust and confidence, the challenges facing charity are considerable.”

Compulsion or Conviction?

Compulsion by the law or regulation has its place – particularly where individual voluntary change is slow or cannot be relied on.  But law and regulation are not just about compulsion – they can be used to inform and empower the disadvantaged (in this case those excluded from roles, processes and resources) as well as to challenge, persuade and enforce change where change is not happening.

And voluntary or self-regulation can’t be relied on either.  Arguably, the Fundraising Regulator is a recent example of where self-regulation, set up in response to a perceived sector-wide failing, hasn’t so far been as effective as it might have been[9].

The 3 external regulators for the charitable sector in the UK could – perhaps should – require all charities above a certain income threshold to report against a small number of Diversity, Equity and Inclusion indicators as part of the existing annual return.  Given its new rhetoric, it’s possible that the Charity Commission is already gearing up for greater scrutiny of how we fulfil our professed values.

As a values-based sector, the voluntary sector shouldn’t have to be compelled to make Diversity, Equity and Inclusion a core operating principle underpinning everything we do.

But – because this is so important and change has been so slow and because trusts and foundations have no other external pressure to change – I believe regulation and compulsion is about to become necessary unless we can make genuine progress on this ourselves within the next 12 months.

[1] www.acf.org.uk/policy-practice/stronger-foundations/

[2] www.acf.org.uk/news/foundation-trustee-boards-the-good-the-bad-and-the-data

www.acevo.org.uk/2018-publications-and-reports/racial-diversity-charity-sector

www.inclusiveboards.co.uk/diversity-in-charities-autumn-report/

www.ncvo.org.uk/images/documents/policy_and_research/participation/NCVO_2017_Getting_Involved.pdf

[3] www.acf.org.uk/downloads/magazines/TFN_July_2018_FINAL_v2.pdf

[4] www.grantcraft.org/assets/content/resources/Words_to_Action-_Barbara_Chow.pdf

[5] www.mckinsey.com/business-functions/organization/our-insights/delivering-through-diversity

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/49785/bis-13-556es-business-case-for-equality-and-diversity-executive-summary.pdf

www.nhsemployers.org/your-workforce/plan/building-a-diverse-workforce/tools-and-resources/business-case-for-diversity

[6] www.civilsociety.co.uk/news/charity-leaders-are-telling-the-commission-to-force-them-to-improve-diversity.html

[7] www.civilsociety.co.uk/news/sector-reaction-to-new-charity-commission-strategy.html

[8] www.gov.uk/government/publications/charity-commission-strategy-2018-2023/charity-commission-statement-of-strategic-intent-2018-2023

[9] www.civilsociety.co.uk/news/david-ainsworth-is-fundraising-regulation-working.html

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