GuideStar International Speech by Geoff Mulgan

Key Note Speaker

Geoff Mulgan

I’m here to speak about opening up governance, transparency, accountability in civil society across the world. As I was walking here I remembered a conversation a few years ago between the head of the Canadian civil service and his counterpart in the British civil service. Here in the UK we were introducing freedom of information laws and were quite optimistic about what this would do to the quality of governance, and the Canadian guy with a world weary tone said: “I hope you realise what you’re letting yourself in for. You’ve got to get into your mind the thought of being in your bedroom in the morning, getting dressed and suddenly the curtains are pulled open, the world can see you and it’s usually not a very pretty sight.” Anyone who’s involved in introducing transparency and visibility knows that it can be quite turbulent, quite challenging, but in the end, delivers better results, better organisations and better service to the public.

As Bill said, there are three angles at which I come from this, and I’ll just quickly mention them. One is the perspective of having had a role in government as both a civil servant and a political advisor, looking outwards, and trying in various sectors to introduce new principles of governance and transparency including reform of charity law, which after a long process, has just this year taken affect. I’ll say a bit more about that later, since it is an experiment which may have some use for other countries. I also helped to introduce transparency into public organisations through a wide range of different methods – in part to help rebuild trust which matters acutely all over the world. One of my roles in the UK government was co-ordinating a network of other governments around the world, heads of government from: Brazil, South Africa, America and India, and when we gathered that group together (for private discussions, a kind of mutual support club for heads of government) questions of trust and accountability kept coming to the fore.

The second angle, as Bill said is from a role running a small NGO in East London, trying to follow the spirit of Michael Young, a great innovator, who had the healthy attitude of always taking no as a question. Every idea he came up with initially came up against fierce resistance and he always turned that resistance into an energy and he created nearly a hundred organisations, which are still operating and many of his ideas have spread around the world. We have tried to recreate an organisation in that spirit, both in theory and in the analysis of how does social change, social innovation happen, but also doing it in education, health, local communities and so on. I hope our work may be of interest to some of you here.

The third perspective is that I’m halfway through chairing a commission for the Carnegie Trust, which is looking at the future of civil society in Britain and Ireland. It’s a follow-up to a commission they ran about 30 years ago, which helped prepare the way for new approaches to the voluntary sector.

We’re looking broadly at civil society encompassing faith organisations, trade unions and others and trying to think ahead: in the dynamics of change from globalisation, in a UK which now has very large diasporic communities organising philanthropy and social action in very different ways from a generation ago. The impact of technology, the Myspace, YouTube generation who are finding much quicker ways of organising civic action than was even imaginable five or ten years ago. The difficult relationships with government, big business, big philanthropists exercising power over communities and trying to negotiate the terms of that power and so on.

What I want to focus on though, in some ways is much simpler than that. My interpretation of the core question for this assembly is: How do you cultivate trust and legitimacy, through accountability and transparency? It’s a question which I is live not just for civil society organisations, but for governments, big businesses, scientists. I think it’s more important for civil society than for any of those institutions because our moral legitimacy is more fragile, is more dependant on trust than any other sectors, which are working more often with the grain of self-interest, power and money. It also matters more because so many people in civil society assume that having good intentions is enough. It is obvious we are doing good. Why should we have to prove it? And yet, again and again through history – certainly in the UK - there have been backlashes, swings against charity and civil society - because it couldn’t show clearly enough how it was doing good for the public.

The context for GuideStar is very exciting. We have the threat of turbulence economically, but in the longer run we are still reaping the rewards of a generation of radical energy across the world unleashed in part by 1989. Energy which has been pushing a set of ideas about governance through many, many nations, and many, many sectors where they weren’t before. Ideas about rights, about equity, about transparency. We have well over a hundred and twenty, a hundred and thirty democracies now, at least paying lip service to ideas which were quite marginal, even thirty of forty years ago. At the heart of the post ’89 revolutions, velvet and otherwise, is the very simple idea that power, to be good, has to be answerable, has to justify itself. It’s not enough to believe that someone is virtuous, or has the right intentions. You can only really trust them to be good continuously over time if they have to answer for their actions. It’s a very, very simple idea. An idea which has been campaigned for all over the world by civil society, an idea which was in part enshrined in democracy, but always depended on things outside the formal structures of democracy to work. Last year, I wrote a book on this question, called: Good and Bad Power. I looked at how different traditions across the world: Chinese; Indian; Muslim; Western, had thought about what made power ‘good’. And what was striking to me was how across every civilisation, some of the ideas were very, very similar. Much more similar than I expected. Ideas of what it means to be a good servant, of the nature of power’s role in relation to welfare, and protection and justice and so on. But what the modern world added into this mix was the idea that you’re only likely to get sustainable good power, not dependent just on the virtues of the leader, if you put in place structures which make it difficult for people in power to survive by being bad. These structures are found in constitutions – and are continuing to be argued out in civil society. They include:
- Elections, the idea that you can vote out bad people - an idea which is very strong in parts of civil society and completely absent in others.
- The idea of divisions of power - you’re more likely to get good behaviour if there are complementing and competing structures. In some ways this is the idea of trustees being separate from the managers, again not present in some parts of civil society.
- The idea of power having to be sub-ordinate to the rule of law and constitutions, again an issue which has different interpretations in civil society.
- The idea that there should be transparency, and that the more you know about what people are doing through data, freedom of information and so on, the more likely it is they will not be corrupt or do the wrong thing.
- And in the last twenty or thirty years, a new idea which has become increasingly powerful: the idea that third parties are critical to good power. Independent organisations commenting on what the powerful are doing, they may be the World Bank or the IMF or the European Union or audit commissions or inspectors of various kinds.

Now all of these ideas are important for civil society, not because we can simply read from one sector to another but because these seem to be fairly universal principles. There are many countries where none of these apply in government or democracy and some countries have gone backwards. Italy under Silvio Berlusconi breached every single principle I’ve just outlined, with a monopolisation of power, the abuse of law etc. And these arguments are working their way through in business. We’ve now had thirty years of pretty fierce argument about whether any of these principles apply to big business. Prompted by disasters like Love Canal in Buffalo in America and Bhopal in India, business has had to justify it’s actions, open itself out, and some countries are introducing much stricter reporting requirements for environmental actions, social actions and so on. I was involved a bit in the early stages of the Extractive Industries Transparency Initiative, which was a good model, introduced to require companies to reveal their payments to governments in mineral rich countries. I remember the most senior advisors in three British government departments saying it was impossible and could never happen, and within six months it had happened. Another good reason always to take no as a question not as an answer. We also have the great work of Transparency International embodying this idea of third parties as guardians of truth and integrity and changing the behaviour of organisations with power.

In the public sector there is a continuing evolution and argument about how far to go in making things transparent. Some of you may know the Beaubourg Building in Paris built by Richard Rogers. What was striking about that building, built in the ‘70’s, was that all its inside piping was put on the outside so you could see it. I like to think that some of what’s been happening to governments is exactly like that. Their internal management information, which used to be discreet, secret, slightly embarrassing, a bit like the plumbing, is now put out on the outside, so that anyone can see it, can judge it, can contest it and so on. In the UK we have probably gone further than anywhere else, perhaps slightly too far, in having open information about the performance of every school, every hospital, every police force as part of public accountability. In the US it’s claimed that hospitals doing cardiac surgery, in terms of their survival rates one year after surgery range from 0% to 100% and have done all they can to suppress this information from getting into the public domain for fairly obvious reasons. This sort of information is fairly explosive at times and deeply destabilising to the profession, but ultimately empowers the public.

In civil society there are fewer indicators, fewer norms of transparency and openness than there are, even in business perhaps now, and certainly than in the public sector in some countries. In part, that is because of competing ideas of what accountability should be about. When is accountability essentially democratic in nature, to a membership, to communities directly affected by services or actions? When is it essentially an idea of trusteeship? Of a small number of people as guardians of more timeless principles? And when is it essentially a more social entrepreneurial idea which is about giving an individual as much freedom as possible to do what they like (and most social entrepreneurs don’t like too much accountability, sometimes for good reasons, sometimes for bad ones). Likewise most philanthropists are very uneasy with being accountable to their beneficiaries and the venture philanthropist movement has taken that to a new extreme, really back almost to where we were in the late 19th century when the wealthy thought the poor should just be grateful recipients of what they did for them, rather than having any say over decisions and power. And I think we’re still at an early stage in terms of the more formal evaluative methods of making sense of what’s good and what’s bad, what works and what doesn’t work. We have notions of civic value and social value and public value, social returns on investment, impact assessments and so on. But the field in civil society is some way behind the equivalent fields in public policy and public sector, again for some good reasons and some less good reasons. I’m confident that we’re going to see quite an explosion in the next ten or twenty years of innovation in exactly this field, which is one of the reasons why I’m so interested in the work GuideStar is doing.

Bill mentioned some of Michael Young’s work, and back in the ‘50’s and ‘60’s he was trying to do things which were very hard then but are much easier now. So for example, he noticed how consumers in this emerging consumer society lacked reliable information to judge the quality of the products they were buying or the financial services they were getting. So he set up a Consumer’s Association, a ‘Which’ Magazine which tested different products and gave people the power to exercise choice as consumers. He tried setting up similar institutions in the public sector in schools for example, but at that point, there was very little demand, people were just grateful for whatever was provided for them and there wasn’t much appetite for information. Now thanks to the web, projects of this kind are much easier to set up, and I just want to mention two or three which are hopefully interesting to this group, where simple uses of web technology can transform the relationship between citizens, civil society and holders of power.

A small example is a project we launched this year, which won the Annual Civic Media Award in the UK, last month, called ‘Fix My Street’. About as prosaic as you could imagine, a website using Google Maps on which you can click on a map to say where there is an abandoned car, a broken street light, something like that, send a message directly to your local council to get it fixed, but also provide an opportunity for other citizens to comment on it and perhaps give advice on how it could be fixed and so on, and very quickly this has got thousands and thousands of users, it costs almost nothing to do, but transforms the power relationships both vertically and horizontally.

Another example is in the health field where a social entrepreneur from the School for Social Entrepreneurs in our building launched a project in Yorkshire called Patient Opinion, giving patients of health services a web space in which to talk about their experiences of doctors and hospitals. Sometimes feeding back good experiences, thanking nurses for all the amazing things they’ve done, but also critical, experiential information, and again providing others with an opportunity to comment on it. Government was so impressed by this that in the rather classic way, it nationalised the whole project. But that’s often the way with social entrepreneurship: in the very moment of success you are squeezed to the margins. But this is another example of creating new feedback loops, which empower the citizen, require the managers, the providers, to be more responsive and put in the public domain a whole set of information, in this case much more qualitative, subjective information, which compliments the formal quantitative information we have on hospitals performance, on operations, treatment times and so on.

Another example in the building I’m in is much more directly focused on philanthropy, a project called Intelligent Giving, which is trying to create a mass market website to give the public advice on where to go, where to put their money, which charities perform well, which ones don’t and again creating an open space for comment on information and data there.

A final example I’ll give of this territory is one I have no involvement in at all, but have admired from afar, again, as a simple example of the power of the web in transforming power relationships. A young man in the UK a year or two ago decided to create a website simply showing where European agricultural subsidies went. Who was receiving this money? No-one had done this before and it turned out to be quite hard work getting the data but he managed to get it in a series of countries across Europe, and in every case it showed that the main recipients of this money were very rich land owners and in particular royal families. Strikingly in the UK, Denmark and Netherlands the royal families were the biggest recipients of this massive subsidy from Brussels. That in turn created a political argument about whether this was the right way to spend very large sums of money, keeping royal families in the state to which they’re accustomed.

There is a general theme here. It is about how knowledge and information create power and it’s about how more equal access to knowledge and information helps to equalise power. But there’s also another crucial theme in some of these projects and that’s the idea that the beneficiaries of any actions have to be part of the picture. They need to be in some ways compliments to any externally driven requirements for accountability, whether those requirements are coming from governments, or foundations or anyone else. I like to think of, the healthiest approaches to accountability as working in 360°. This is a model we tried doing in the public sector in the UK. It’s a very simple idea, if I had a PowerPoint slide I could do you a nice picture, but I don’t. Its basic premise is that organisations are most likely to serve the public, to stick to their mission, to act with integrity if they have a healthy balance of the top down, the horizontal and the bottom up. By ‘top down’ requirements I mean requirements which may come from law or from regulators or from big providers of funding like foundations, or governments, or philanthropists reporting on performance data, on money, on management costs, all these sorts of things, and require them from on high. That’s healthy, so long as it doesn’t go too far. If it goes too far, it becomes a distracting burden and certainly there are many sectors which have experienced that sort of top down requirement over-shooting. Then there’s ‘horizontal’ pressure and support. Sometimes that may be pressure to take over failing organisations, as happens in markets, but happens much less in civil society and charities. Sometimes it may mean peer support, horizontal learning networks, collaboratives, or for that matter peer review. I think we have far too little peer review in civil society of people from similar organisations, simply coming and looking under the bonnet of the engines of other organisations in civil society. In the UK government has just done a very radical experiment, thought to be impossible five years ago when it was first proposed, in which every government department in the UK has been subjected to a “Capability Review”, whereby a group of both civil servants and people from outside government have been given free rein to look at how well the department is organised, whether it’s good at strategy or personnel or finance or implementation, and then to publish a report marking it with scores out of a hundred. Most British departments have scored really badly on most of these things. It’s been a very painful process for the British civil service. It is accountability and transparency taken further than anywhere in the world. Many ministers were very unhappy about it as a process, but I’m convinced it will be entirely healthy in forcing them to deal with their deficiencies, because their deficiencies - like the civil servant I mentioned at the beginning - are there in full view of the public, and even if it’s not a pretty sight, at least they will be motivated to put it right.

The third part of this picture is bottom up pressure, bottom up rights. This is the heart of the long movement in fields like disability to ensure that the recipients of services have as much say over what’s provided as the donors. It’s where some of the experiments in Latin America, around participatory budgeting, participatory democracy, citizen score cards on the performance of organisations are leading the way. They’re certainly having a big influence here in the UK, as are the experiments with Indian Panchayats, giving very, very local institutions apparently formal powers over spending by higher tier authorities. Again, the simple principle that any institution exercising power over people should have to justify what it’s doing. And that applies as much to civil society organisations because although we usually think of them as weak, and usually they are weaker than business and the state, they also exercise substantial power sitting on substantial assets and so on.

All of these devices matter for accountability but they also matter for learning. The only way organisations are likely to really learn and instil a learning culture is if they are bench-marked against others. If you have ways of finding out which other organisations similar to you do better, use resources better, manage people better engage their public or beneficiaries better, you can learn and improve – and combat the default for most institutions which is not to learn, to believe that they probably are doing a great job, that they are working really hard. Always, when the clear light of transparency comes in it turns out that you could be doing better, you could be learning more and so on.

This takes me to the initiative I mentioned earlier on, the experiment which Britain is now going through: introducing a public benefit test for charities. We have a long tradition of charity in this country, all over the world there are of course traditions of charity going back many, many thousands of years, usually linked to organised religions. Our legal form for charity dates to the very beginning of the seventeenth century, a time of economic dislocation, high unemployment and high crime, when the state then was trying to create a legal framework for more public good, more publicly oriented activity. And we had our laws re-defined in the nineteenth century, and unlike most countries, have had a regulator for charity, in the form of a Charity Commission and quite stringent reporting requirements.

But it was clear by ten or fifteen years ago that although these were healthy things to have in place, there were problems and anomalies. Many charities couldn’t demonstrate why they were serving the public interest, so we had elite private schools, elite hospitals which were charities, whereas for example a project helping unemployed people couldn’t benefit from charitable status. And there were many crises and scandals over particular organisations abusing the privilege of charitable status. So at the beginning of this decade we initiated in government a review of charity law working very closely with the sector to re-define what should count as charitable activity. This resulted in widening the range of things which could be counted as charitable, introducing de-regulation for smaller charitable organisations so it would be easier for people to set up a project quickly with very light reporting requirements, but also stronger requirements for the medium and larger charities to have to demonstrate that they really were creating a benefit to the public and ideally a benefit to the public commensurate with the tax relief they’d be getting from the state. This has only this year become law and still has to be interpreted by our regulator the Charity Commission. It undoubtedly will be contested in the courts and many lawyers just a few hundred yards from here will make a lot of money through fierce court cases which try to clarify exactly what this public benefit test means. But part of our purpose in introducing it was not just to strengthen regulation, but also to encourage a different culture within charities so that it would be more normal for trustees to reflect perhaps once a year on whether they really were doing good for the public. Whether they really were creating a benefit for the public rather than assuming they were doing good because they had good intentions.
This needed to be complimented by greater transparency, through GuideStar and others putting into the public domain the basic data that the public need as donors or as volunteers to judge where they should put their energies their passions and their commitments.

One more thing I want to mention before I shut up. The discussions you are having today are part of one other big global trend whose full meaning remains unclear. This is the global trend to making much more data visible, usable, mine-able, match-able, than was ever the case in the past. We have enormous data sets in many countries which are useful for civil society. We are initiating, starting next month, a major two-year review of changing patterns of need in the UK, which we’re doing for about a dozen foundations who have collaborated together to fund it, along with our Economic and Social Research Council. One of the things we are trying to do is to unlock other data, which could be useful to people interested in meeting social needs. Much of that data is in the private sector, held by credit rating agencies and market research companies. Much of the data lurks within government departments, paid for by the tax payer, but then kept secret, and one of the things we’re trying to do is to make as much as possible of that data available for the public. Two or three months ago, one of our trustees, and one of our fellows at the Young Foundation did a review for government on the future uses of public information. It’s a very short report but worth looking at if you’re interested in this field, and the government responded surprisingly positively to it. It was essentially arguing that many governments have been going the wrong way in the last twenty years, they’ve been trying to make this data commercial, trying to make as much money as they could from selling geographical information or public statistics and instead, the argument was, this should be a public good, and the underlying source-codes and protocol to that data should be made as open as possible, so that citizens can analyse it, match it, mine it, use it to create new value. I think there is going to be a great comparative advantage for those societies which essentially operate like the Richard Rogers building, and make as much of the knowledge about themselves as visible, as transparent as possible. And huge opportunities for civil society to innovate around the uses of that data, on everything from healthcare and long term conditions, to new modes of transport, to how you respond to climate change with more local sourcing of food, local transport and so on.

As Bill said, we may well be entering slightly turbulent times. Usually downturns are not very good times for philanthropy. Civil society often gets squeezed, and finds it harder to make its case when people are turning inwards, when they are more in survival mode. Downturns are pretty cruel for businesses and governments which look very competent and impressive during booms but once there’s a downturn, can look frail, vulnerable, and foolish. But the same will be true for many civil society organisations. If there are weaknesses, those will become more apparent during downturns and therefore taking trust and trust-building activities seriously will become even more important if we are entering turbulent times – times which will also mean more acute needs.
Confucius once said of rulers that the three things they needed were arms, armies, food and trust, but if they had a choice they should always take trust first, because it was trust that opened the way to the others. Civil society around the world thankfully doesn’t own any armies, but the same principle applies. The one thing we can never afford to take for granted is trust. Trust has to be earned, trust has to be built, and trust has to be institutionalised.

Thank you.