Scotland's charities need to be more diverse with too few women and people from ethnic minorities in top roles – Susan Murray

Charities touch all parts of our lives, everyday, everywhere. Whether you are aware of it or not, charities are ubiquitous. For many of us, they are very personal.

The public raises money for charities through events like sponsored parachute jumps, while charities have considerable influence on society (Picture: Barry Batchelor/PA)

People support charities and causes close to their hearts, often after they’ve helped family members in an hour of need. It could be through cancer treatment or homelessness, dropping off food in lockdown, or providing an air ambulance or lifeboat to rescue us after an accident.

Support could be by giving time through volunteering, donating money, or goods. Perhaps you’ve found yourself sponsoring or being sponsored for walks, runs, silences, drumathons, or even parachuting out of a plane?

As well as many different causes, Scotland’s registered charities have many different organisation types and scale of operations – from small volunteer-run associations to companies employing thousands of people. The charity sector employs as many people as the NHS in Scotland.

The largest 300 charities represent just one per cent of the total number of charities registered in Scotland, yet they control over £10 billion or 73 per cent of the sector's total annual income.

The David Hume Institute analysed the top 300 by income to see if the leaders are as diverse as the communities they serve.

Within this top group, there is a huge range in charity type; from housing associations, universities, colleges, leisure trusts, funders, faith organisations and schools, as well as health and care organisations.

The top 300 contains surprisingly few of the household names who might be front of mind if you were asked to name a charity.

Despite the huge range in type of charity, the Institute found leaders have very similar characteristics to leaders of other sectors in Scotland.

Only one in three of the chairs or chief executives is female. There is very little ethnic diversity and almost three out of four leaders were born in the 1950s and 1960s.

This is despite the work of campaigns like #CharitySoWhite and Young Trustees Scotland. Faster progress is needed if organisations are to benefit from diversity of thought.

Increasing diversity of thought is in everyone’s interests. It improves risk management and productivity, as well as helping to avoid the pitfalls of group think – where similar people think or make decisions as a group, resulting in unchallenged, poor-quality decision-making.

Diversity matters for our economy and society. More equal societies have higher productivity, and high productivity allows more investment to create more equal societies.

Positive findings from the research show many areas where charities are getting it right: leaders have a wide range of professional backgrounds and many organisations have diversity of background between the two key leaders.

Complementary skills and different backgrounds in the organisation’s two key leaders are likely to lead to a stronger, more resilient organisation.

There is also more diversity in educational background than other sectors previously analysed by the Institute, with some leaders who didn’t attend university, or attended later in life rather than following a traditional career path.

For the first time, the Institute’s research found leaders who job-share, which is an important milestone for attracting and retaining talent who want flexible working arrangements.

Charities were at the heart of the country’s Covid response and will remain at the heart of economic recovery. The leaders of Scotland’s top charities are making decisions that affect all of us and that’s why the legal duties of charity leaders matter.

By law, all charity income and any associated assets must be managed for public benefit, placing significant responsibility on the shoulders of charity leaders to demonstrate this requirement.

However, at present, charities are interpreting their legal duties in different ways. Some organisations follow the Scottish Charity Regulator’s good practice guidance, making annual accounts available on their websites as well as the details of who governs the organisation. Others are less transparent.

Surveys show high levels of public trust in charities and there are significant tax benefits – business rates and VAT relief and gift aid on donations – from being a registered charity.

All registered charities can reclaim tax on donations from the Treasury. The more that is reclaimed in gift aid, the less there is for public spending. Given the need to make good use of public funding, it is essential that the organisations benefiting are transparent about their leaders.

Unlike the register of directors that is available from Companies House, trustee information is not publicly available from the Scottish charity register. Annual reports on this charity database can have trustee information redacted.

The lack of a publicly searchable register of trustees means it is not possible to know the reach, influence or scale of funds that each person is overseeing.

The Scottish Charity Regulator’s good practice guidance encourages transparency regarding persons with significant control over the organisation and many charities do list trustees openly on their websites, but this still requires a manual correlation to track cumulative influence.

Given the scale of the charitable sector, the size of income it controls for public benefit, and its role as a powerful influencer of society, it is crucial that we know who its leaders are, and whether they are bringing diverse thought to their vital roles.

Who and how charities are governed has never been more important. It is critical that all charity leaders deliver on their public benefit duties. This includes delivering on diversity within their organisations and leadership.

Susan Murray is director of the David Hume Institute and a member of the Institute of Directors

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