What the expenses scandal means for social entrepreneurs

It was interesting to read today that the CEO of Barnardo's is going to publish his (and his senior management team's) expenses, on the back of the MP's expenses scandal. [NB - if you're an international / non-UK reader and this hasn't made your news, check out Wikipedia's current take (or any UK newspaper's website, frankly)] It's interesting, because it's the first I've read of the scandal having a direct impact in this sector. But there are real implications (and lessons), positive and negative, for social entrepreneurs and the broader third sector.

Firstly, it is about legitimacy, which is at the core of the social entrepreneur's journey, particularly in the earlier stages. They are not appointed to a job, nor elected to one, so have to earn (and learn) their legitimacy through their actions, through involving their community (+ stakeholders), and through learning and recognition from others. Like MPs, they are trusted to spend money and make decisions on how that money is spent, so transparency and value for money are also absolutely key. This row has only served to underline how important transparency and value for money are in the modern age (and especially the current climate); and it's shown how swiflty legitimacy can be lost through inappropriate actions.

What has also become clear from the MPs expenses row is that a set of rules are not enough to hardwire an ethical approach into being.The MPs soon realised that operating "within the rules" was not enough, and that it was also about operating in the "spirit" of those rules that was important. And, no matter how improved they are made, and how less flawed, and how much more scrutiny there is, a true change will also require a true change in the spirit of how the MPs approach their expenses. In the public and third sector alike, rules and regulations are important, as are transparency and measurement (value), but so is the spirit and motivation that drives the way in which things are done. What it boils down to, again, is that rules and regulations and legal boundaries only take you so far: it is the people, and their motivations and skills, which make it a success or a failure. This is as true in the social enterprise and charity world as in the world of politics.

Finally, it's interesting to note that, despite what Barnardo's has to do, scrutiny and accountability-wise, for its funders and regulators (eg. Charity Commission) and trustees, its CEO still identifies the need to do more. And I think what that signifies, after the collapse of trust in one set of institutions (our financial ones) and now the collapse of trust in another (the political world), is that the bar is effectively raised for all organisations in terms of transparency and honesty. But this is especially the case for organisations in the third sector, including those started and run by social entrepreneurs...where trust and legitimacy is so crucial to their work being effective and impactful.

Comments

[Mike Chitty]

Be interesting to see if they publich salaries as well. Possible in the US for 503c companies to just take 'profit' out as salary!

We can be sure that the public and private sectors do not have the monolpoly on corruption.

[cliff]

Right on the button Nick, as ever. With few rules or legal boundaries, social entrepreneurs have to do even more to earn public trust. But - and there are several buts:

- do we want social leaders judged by "do no wrong" or by "do lots right"? As stephen fry said, we are sacking politicians for expenses claims not for unjustified wars.

- by exposing pro-social people to intense scrutiny, we expose wrongdoers there but not the much bigger wrongs in commercial media or in corporate greed;
maybe the most interesting outcome for our sector is the importance of transparency - so much talk about social impact reporting, but in the public eye transparency seems much more important

OK so in the interests of that, all charity accounts show salaries over 60k (from memory) in 10k brackets, and also total expenses for trustees. They are public access via charity commission website.