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Qualities of an effective charity
Updated October 2009
Charities Services' vision is a strong charitable sector for New Zealand, which enjoys a high level of public trust and confidence
Charities Services' vision is a strong charitable sector for New Zealand ― one which enjoys a high level of public trust and confidence.
Charities operate for many different purposes, but with the common intention of providing the best possible outcomes for their beneficiaries.
Of the more than 23,000 charities registered with Charities Services, there is a wide variance in their relative size, income, complexity, and activities. Some charities are newly established, while others have a long history. Some have ready access to resources, expertise, and support, while others are less well-resourced.
In consultation with members of the charitable sector, Charities Services has developed a statement of the qualities that it considers contribute to making a charity efficient and effective, and best able to achieve its purposes.
The qualities are not a new compliance requirement for charities, but Charities Services does consider they that are relevant for all New Zealand charities
For Charities Services, the "qualities" are intended to assist in working with charities in relation to matters of education and good governance.
In this light Charities Services sees the qualities as a "query tool" that charities can use to help develop the effectiveness and efficiency of their work and operations.
Charities Services hopes that charities will consider the qualities and "tailor" a practical response to them to best fit their own structure, size, complexity and activities.
This kind of response will assist in building public trust and confidence in the charitable sector.
In New Zealand, the qualities of an effective charity are that the charity:
Is clear about its purposes and direction
An effective charity is clear about the characteristics and needs of its beneficiaries, its charitable purposes and vision, and uses this knowledge to guide its decisions and activities. The charity:
- is able to explain how all of its activities relate to and support its stated purposes
- is independent and recognises that it exists to pursue its own purposes
- considers future sustainability – balancing what is needed now with what may be needed in the future
- actively reviews its purpose in relation to its beneficiaries needs.
Has a strong board
An effective charity is run by a clearly identifiable group who make all the significant decisions for the charity, and record them clearly. They are pragmatic and have the right balance of skills and experience, and understand their own and the charity's responsibilities and obligations. They provide guidance that enables the charity to carry out its work and achieve its purposes. The charity:
- ensures that the charity is constituted and operates in accordance with the governing document
- has a governing structure that is the right size for the charity;
- maintains good records of its decisions
- has a clear understanding of the respective roles of all involved in governance and management.
Has the right people for its activities
An effective charity ensures it has the right qualities and competence in its people to manage and support the delivery of its services. The charity:
- ensures its trustees understand that they must act only in the charity's interests
- identifies and manages potential or actual conflicts of interest
- identifies the mix of skills, knowledge and experience necessary for the efficient and effective administration of the charity
- recruits, retains and actively develops staff and volunteers to build its skills and resources.
Shows fitness for purpose
Consistent with its purpose and the public benefit it provides, the charity's structure, policies and procedures enable the charity to efficiently deliver services for the public's benefit and to engage as required cross culturally and with iwi, hapu and urban Maori. The charity
- welcomes and acts upon feedback (positive as well as challenging) from its beneficiaries and other people with an interest in the charity about the services it provides and the areas where improvements could be made
- looks at and assesses innovative and effective ways of working towards achieving its purpose and vision
- Implements policies and procedures to protect and support its beneficiaries
- Recognises and values equality and diversity in beneficiaries, staff and volunteers, and in all aspects of its activity.
Maintains a focus on learning and improving
An effective charity assesses its own performance, and monitors changes in relevant social trends and the experiences of other charities in similar areas. Using this knowledge, the charity seeks to improve its performance and efficiency, learn new and better ways to achieve its purposes, guide its planning and influence its future direction. The charity:
- works internally to improve efficiency, to better use funds, and to better deliver benefits and services to beneficiaries
- using such knowledge, the charity seeks to improve its performance and efficiency, learn new and better ways to achieve its purposes, guide its planning and influence its future direction
- actively shares ideas, resources and experiences with other charities and uses opportunities to be connected to the wider charitable sector
- considers collaborations and partnerships with other organisations.
Is sound and prudent
An effective charity can identify the financial and other resources needed to achieve its purposes, and can obtain, control and manage those resources to achieve the best possible value from them. The charity:
- identifies and complies with relevant legislation and seeks information and professional advice where necessary
- considers the sources of its income and has a strategy in place to raise the funds and other resources it needs
- applies the energy of its volunteers and supporters effectively.
Is accountable and transparent
An effective charity understands that the public has a valid interest in it, and manages its accountabilities to its stakeholders and to the public in a way that is timely, transparent, and understandable. The charity:
- complies with its legal obligations (and best practice), and can if needed report on what the charity has done for the public benefit during the year
- can explain how its activities support its beneficiaries and those who rely on its services
- reviews its fundraising strategies and activities to ensure that they comply with good-practice standards, taking account of any relevant ethical issues.