The one area which hasn’t had a lot of coverage so far is the new requirement for public disclosures by funded bodies. The headline here is increased transparency; more opportunity for any stakeholder or interested member of the public (or press) to scrutinise the activity and structures of sport and recreation organisations in receipt of public funding. And this is a bigger and more interesting issue than it looks, with overall positive repercussions for organisations and for the reputation of the sport and recreation sector.
So I want to take this opportunity to explain (as succinctly as possible) what’s involved and why it’s so important. We’re looking specifically at requirements 3.1 – 3.3, which you can find on page 27:
3.1 – Each organisation shall publicly disclose information on its governance, structure, strategies, activities and financial position to enable stakeholders to have a good understanding of them.
3.2 – Each organisation shall publish:
(a) in the case of organisations which employ more than 50 staff, the total remuneration paid to its senior management team; and
(b) the remuneration (if any) paid to each of its directors (except for members of the senior management team who are ex officio directors)
3.3 – Any information disclosed shall be fair, accurate and presented in an understandable manner.
In theory increased transparency leads to increased accountability and together accountability and transparency contribute to better integrity, more effective use of public funds and improved performance for the benefit of all stakeholders. We included accountability and transparency as a standalone principle in our Voluntary Code of Good Governance for just these reasons.
Like all things, there are positive and negative aspects to these new requirements. On the positive side, members and participants will have all the information that they need to scrutinise the organisation and ensure that they’re fulfilling their role effectively; keeping the organisations honest and making sure the interests of members are always central to the decision-making process. Requirement 3.3 prevents an organisation disrupting this process by releasing information in a format that is difficult to access or understand. For the organisations themselves, being open and transparent with this sort of information is an outstanding way to engender trust; everyone can see that they have nothing to hide.
The negative aspects primarily effect the organisations themselves. Firstly, there’s additional work involved in releasing more information. Most of this can be incorporated into the existing reporting framework (to Companies House, the Charity Commission and the Sports Councils as appropriate), but there will certainly be some work involved in gathering and presenting this additional information. On the positive side, UK Sport and Sport England have committed to working together to review their own reporting and assurance requirements to remove duplication and reduce the burden as much as possible. At the Alliance, we’ll also be looking at what we can do to help and guide our members with this process.
The second negative effect on organisations is the pressure that will be placed on them by the increased scrutiny. In addition to the changes that are required to comply, there will also be a need to deal with an increase in challenge from members arising from their ability to scrutinise in more depth. However, the scrutiny itself is to be welcomed as it represents improved accountability in sports governance (something that has been lacking in some high-profile news stories recently). If the increased transparency and resulting scrutiny has the desired effect this issue should only be short-term; the initial scrutiny forces change in the organisation to correct the issues and, once these issues are corrected, the level of challenge will decrease.
Although additional work is required now, on all aspects of the code, the benefits that will be realised because of these changes will outweigh the short-term impact of its initial implementation. Better governed, more transparent and more accountable organisations will also be better performing organisations, more connected to their membership and better equipped to fulfil long and short-term strategic aims.
The most important impact of these requirements is the power they give the ordinary person to understand how publicly funded sporting bodies are operating. Forcing organisations to improve public disclosure about their governance and finances allows all of us to hold them to account on an ongoing basis, rather than relying on investigative journalists to uncover the information and splash it across the front pages first as we’ve been doing increasingly over the last few years.