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A £10 Gift Gets What?

On 18th October 2007, the Charity Commission held a seminar to discuss the role that charities may have in improving their environmental responsibility.

One of the biggest challenges that charities face in terms of their efforts to be environmentally sustainable, is the extent to which they are able to balance fiscal responsibility with an environmental conscience. It is the goal of the charity to limit their running costs in favour of devoting the majority of their funds directly to their charitable cause. In fact, charity trustees have a duty to maximise their charity's resources.

Of course, there are many environmentally responsible actions that also reduce costs for the charity, such as limiting wasted electricity, but other environmentally favoured strategies are more costly than their alternatives. With this in mind, how much additional money should be siphoned into the organization's overhead if it will improve the charity's environmental reaction? For example, is it responsible for the charity to pay more for recycled paper?

The law requires that charities act within their objects, and use all of their assets to further those objects either directly or indirectly. The Charity Commission has determined that each charity should be left on its own to determine which level of environmental activity is right for them. The decision should be made by the organization's trustees and reflect a rational decision that weighs the additional cost against the benefits to reputation and donor confidence. Arguably, some organizations will experience a much greater benefit from exhibiting an environmental conscience. In fact, some organizations, particularly those that reflect environmental and wildlife causes would be reputably harmed by not adopting as many sustainable practices as possible.

As green issues become more important in the public's mind, more organizations will find that their stakeholders consider such issues relevant to the charitable cause. Although charities are often viewed as a benevolent sector of society, it is important to remember that they can also be a powerful economical, and therefore environment, force.

Legally speaking, the Companies Act 2006 does require that directors of charitable companies consider environmental impact as they plan to achieve their organization's purpose. Although currently this legislation only applies to charitable companies (charities that have been incorporated), it is likely that future laws will include unincorporated charities as well.

Therefore, many charities are currently carefully considering their organizations' efforts toward environmental sustainability because of internal, stakeholder, reputation, or legal encouragement. However, it does appear that the process will be slow moving and that a great deal more encouragement will be required before the third sector becomes a green one. In fact, the Charity Commission has determined that out of the 30 largest registered charities (by income); only four reference the environmental impact of their work.

Although agreeing that environmental impact is a relevant and important issue for charitable organizations, the Charity Commission has thus far declined to address environmental issues in their reporting requirements. This delay is due primarily to a lack of an established good practice for such reporting and a desire to limit the regulation burden that the Commission places on charities.


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