Chasing Shadows? Perspectives on Self-Regulation in UK Charity Fundraising
| Date | 01 September 2006 |
| Author | Jenny Harrow |
| DOI | 10.1177/095207670602100307 |
| Published date | 01 September 2006 |
| Subject Matter | Articles |
Chasing Shadows? Perspectives on Self-Regulation
in UK
Charity Fundraising
Jenny Harrow,
City University, London
Abstract
The policy developments culminating in the creation of a self-regulatory body
for charity fundraising for England, Scotland and Wales are explored.
Underpinned by literature on regulation, the paper identifies policy
chronology and processes leading to the establishment of a ’Fundraising
Standards Board’ in 2006. It reports on the roles of some leading charities in
driving the policy forward and draws on the metaphor of the ’shadow of the
state’ as ever present in self-regulation systems. It considers the prior
complexity of UK charity fundraising regulation and suggests that this latest
development reflects a market-based view of the fundraising environment,
rather than one which delivers new accountabilities.
Introduction
The blend of behavioural expectation and limited institutional mechanisms
that constitutes self-regulation may be regarded as a regulatory ’ideal type’.
Strongly trust-dependent and apparently inexpensive, self-regulation systems
aim to confirm industry credibility, and perhaps limit government culpability.
Yet ’regulating is core government business’ and ’self-regulation has always
been subject to public criticism
concerns that
...
(with) ...
self-regulating
organisations have inadequate incentives to enforce the rules that protect the
public’ (DeMarzo et al., 2005, p.688). In charities and NGOs, with
organisational imperatives to show to whom and for what they are
accountable, voluntary self-regulation is becoming a prominent means of
responding to such pressures. (Lloyd and de Las Casas, 2005). Here, the
weaknesses of self-regulation are no different to those in for-profit sectors,
notably dependence on goodwill and commitment for compliance, lack of
enforcement mechanisms and limited sanctions.
Against such challenges, this paper reviews the development of a newly-
created self-regulation framework for charity fundraising in England, Scotland
86
and Wales (Home Office, 2005). This development culminated in the
inauguration in 2006 of the ’Fundraising Standards Board’ (FSB). Sectorally-
led but government-sanctioned, the FSB is a collectively-oriented and
membership-based body. It is non-governmental and outside the remit of the
existing dominant government-based charity regulators. However, with
significant govemmental start-up funding, the FSB appears also quasi-
governmental. The purposes of this paper are to review the wider context of
charity regulation in these countries, to describe the stages of the FSB’s
development, and to reflect its form and future, using organisational and
fundraising practitioner perspectives.
The paper’s thematic framework follows Newman and Bach’s work (2001),
in which ’the shadow of the state’ is critical for successful industry self-
regulation. Thus, why and how the state shadow is being cast, and by whom,
is important. As an explanatory metaphor for state activity, in this case, the
shadow may be both protective of the self-regulated (for example, shielding
charities from public criticism) and menacing (if state intervention is set to
follow self-regulatory failure). Moreover, the notion of the shadow of the state
offers further insights into the policy flux of governmental/charity relations
where regulation and accountability questions are raised. Some leading
charities’ apparent prompting of this development suggests that they share in
casting a shadow over the remainder of the charity sector.
The paper commences with an overview of regulation concepts and
regulation’s role in delivering accountability and the use of the shadow
metaphor in charity and NGO literature. In the context of prior charity
regulation structures for England, Scotland and Wales, a chronology of events
leading to the FSB’s creation follows. This examines the policy sources and
patterns of subsequent governmental-charity interaction. Finally, the paper
contains reflection on the challenges faced by the FSB and on the extent to
which this instance of charity self-regulation lies within the ’shadow of the
state’
..
Regulation - a challenging and challenged concept
The case for a ’regulatory society’ rather than a ’regulatory state’ is made by
Black (2002, p.1 ) where she argues that ’regulation is ’decentred’, defused
throughout society. Black emphasises that command and control regulation
has myriad sources of failure. In contrast, in decentred approaches, actors
other than the state may be harnessed in the design of hybrid mechanisms, to
further the state’s continued regulatory objectives. A decentring analysis of
regulation then contains assumptions about interactions between a variety of
actors, including governments. This makes regulation a co-produced multiple-
way process. Parker identifies ’compliance-oriented regulation’ as a major
strand of governmental regulatory policy, whereby enforced self-regulation
and voluntary compliance ’steer corporate conduct toward public goals,
without interfering too greatly with corporate autonomy and profit’ (2000,
p.530). This form of regulation may however be ’weaker, perhaps less
87
expensive and certainly less aggressive than other styles of regulation’;
displaying a ’danger that compliance rhetoric will be used merely to manage
appearances’ (op. cit., p.560).
Reviewing scholarly contributions to conceptualising accountability in
government, McGarvey (2001) describes how the ’regulatory state’ replaces
the ’interventionist state’ as a response to loss of control. This privileges elite
policymakers’ interests and downplays democracy. Yet control rather than
democratic regulatory systems is precisely what is sought in those industries
where regulation is intended to secure public safety (Hood, et al., 1999).
Drawing learning from controlling-style regulatory systems also appears
problematic, with disincentives for reporting potential dangers (for example,
Tamuz, 2001).
Regulation then is a complex set of governmental and quasi-governmental
activities, seeking to control practices and behaviours to protect the public.
State roles are in flux, especially where other frames of interest (such as
community control structures) come into play (Scott, 2004). Self-regulation
may transfer costs to the regulated industry and ’at least in some contexts, ...
be an effective and efficient means of social control ...’ (Gunningham and Rees
1997, p.363). It may be a cautious response to an industry’s critics, deployed
when governments wish to avoid disturbing vested interests. More pro-active
than this minimal disturbance approach, is the adoption of self-regulation as a
deliberate step away from full regulation. Here government and industry seek
mutual accommodation, for example where the latter performs contracted
government work. For the UK charity sector, for example, ways to lessen
regulatory impacts on charities providing public services have been the subject
of government led scrutiny (Better Regulation Task Force, 2005).
Self-regulation may also be seen as a coming of age in industries where
members are acknowledged as trustworthy. It is cited by Ebrahim (2003) as
one of five ’broad mechanisms’ for NGO
accountability, alongside disclosure
statements, evaluations, participation and social audits. Yet the opportunity for
self-regulating predators to gain on their prey remains an underlying theme.
Newman and Bach (2001, p.6) recognise this: ’many fear that self-regulation
benefits from image while ....permitting the wolf to guard the sheep’.
So, is self-regulation invariably a staging post on the route to full
regulation? What policy prompts to and from within government promote self-
regulation ? Why and where is state support for (or indulgence of) self-
regulation more or less marked? Are self-regulation systems inevitably elite-
dominated ? In exploring these questions, using the example of the Fundraising
Standards Board scheme, this paper draws on the metaphor of the ’shadow of
the state’ as it relates to the self-regulation concept.
The ’shadow of the state’
’Shadows’ appear as persistent metaphor in nonprofit literature concerning
state/non-state relations. For non-state organisations, the metaphor sometimes
has a threatening if not sinister implication. Thus Wolch’s (1990) work
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explored interdependency between voluntary groups and the state, with parts
of the voluntary sector becoming a ’shadow state’. These were a ’para-state
apparatus, comprised of multiple voluntary sector organisations, administered
outside normal democratic politics and charged with major collective service
responsibilities previously shouldered by the public sector, yet remaining
within the purview of state control’ (op.cit., p.xvi). In contrast, Shields (2002,
p.2) perceives an outright threat to this sector as the state moves it away
’... from its core mission, commercialising ... (its) ... operations and
compromising its autonomy’. This process he describes as ’Capturing Civil
Society: The Third Sector in the Shadow of the State’. Hutter (2006, p.15),
exploring the role of non-state actors in regulation, concludes that ’regulation
beyond the state may take place in the shadow of real or imagined future state
activity’ .
Whether as threat or fact, how does such a concept relate to the regulatory
space in which voluntary organisations operate? From Wolch, it may be argued
that encroaching state control is inevitable for this sector, where it takes on
public roles. For Shields, diminution of sectoral advocacy...
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