League Tables – Keeping the Discussion Alive
10 March 2015 at 10:33 am
The recent launch of the ChangePath charity rating website gives Australian charities, Not for Profits and the broader community an opportunity to reprise its conversation regarding the idea of league tables to be used in the assessment of charitable organisations, writes Professor David Gilchrist from WA’s Curtin University.
According to its website, ChangePath seeks to provide a guide to potential donors. Using Australian Charities and Not-for-profits Commission (ACNC) data and other data it has sourced from publicly available information for 600 of the 60,000 registered Australian charities, it seeks to provide a service assisting people in making decisions regarding the selection of charities they might want to support.
The ACNC has been critical in bringing about opportunities for greater transparency in the sector. Without the collection of this data we would continue to be in the dark as to the make-up of the sector, its contribution and what it does. Policy would continue to be made on a “best-guess” basis and the extremely important legislated objectives of the ACNC—including to maintain and enhance public confidence in the sector—would not be possible to achieve,.
However, the collection of data under the Annual Information Statement arrangements is very new to the sector and to the philanthropic community. So there are some serious issues to consider when seeking to compare one charity with another or that charity with the whole population of registered charities. Charities will get better at providing sound data over time, donors will come to understand what is useful data and what isn’t, and the data collected will likely change over time, particularly in relation to the idea of assessing outcomes rather than outputs. We are not there yet though.
The lack of uniformity in creating the data and the considerable focus placed on financial elements by the broader community are two issues that would significantly restrict the utility of a reporting system that included comparative data. It would potentially put at risk charities that are achieving outcomes. This risk is enhanced as charitable and Not for Profit organisations are incredibly diverse. Therefore, the development of a small number of metrics that are intended to provide for comparison of organisations could be dangerous if not considered as part of a fuller and more comprehensive analytical process. The U.S.-based charity rating agencies have also had some second thoughts as they have seen that a number of unintended consequences can arise if a deeper assessment of an organisation is not made.
Our challenge as a sector is to continue to persevere with the identification and measurement of outcomes notwithstanding the incredible difficulty of this task and to continue to use the data collected to analyse the sector at a population level and at an individual organisation level. It is the outcomes achieved that should constitute the main item for analysis when considering donations, volunteering or other resource allocation decisions.
We must keep up the discussion surrounding the idea of analysing charities and Not for Profits —avoiding pitfalls but seeking transparency.
About the Author: Professor David Gilchrist is the Director of the Curtin Not-for-profit Initiative. He is an historian and accountant. He has held a number of senior roles in the Not for Profit and public sectors and, most recently, was Assistant Auditor General, Standards and Quality in Western Australia. Early in 2011, Professor Gilchrist was appointed to the position of Industry Professor within the School of Accounting at Curtin University where he researches in the areas of Government and Not for Profit performance, regulation, governance, financial reporting and economic history.