Moral Agency in Charities and Business Corporations: Exploring the Constraints of Law and Regulation
Journal of Business Ethics
https://doi.org/10.1007/s10551
Moral Agency in Charities and Business Corporations: Exploring the Constraints of Law and Regulation
Eleanor Burt 0
Samuel Mansell 0
0 School of Management, University of St. Andrews , The Gateway, North Haugh, St. Andrews, Fife KY16 9RJ , UK
1 Samuel Mansell
For centuries in the UK and elsewhere, charities have been widely regarded as admirable and virtuous organisations. Business corporations, by contrast, have been characterised in the popular imagination as entities that lack a capacity for moral judgement. Drawing on the philosophical literature on the moral agency of organisations, we examine how the law shapes the ability of charities and business corporations headquartered in England to exercise moral agency. Paradoxically, we find that charities are legally constrained in exercising moral agency in ways in which business corporations are not. Implications for charities and business corporations are then explored.
Charity law and regulation; Company law; Corporate moral agency
Introduction
If we look forward across the centuries, from their early
roots in the religious orders which distributed alms to the
needy, through to ‘the golden age of philanthropy’ which
saw Victorian charities laying the foundations of what was
later to become the modern welfare state
(Grant 2014;
Williams 1989)
, to the acts of generosity and self-sacrifice
displayed by staff and volunteers in the contemporary charitable
sector, it is not difficult to see how charities may be regarded,
prima facie, as organisations of good moral standing. The
House of Lords Select Committee on Charities describes
them as the ‘eyes, ears and conscience of society’ (2017,
p. 3). By contrast, for-profit business corporations in
general have been characterised as ‘soulless’ or even
‘psychopathic’ organisations
(Bakan 2004, p. 28)
.
Friedman and
Miles (2006
, p. 20), for example, write that the potential for
corporations ‘to do mischief to real people, combined with
their lack of inherent moral sense, lack of a soul or
‘feelings’ for the consequences of their actions on others, such
as shame, remorse or gratitude’ has led to various solutions
aimed at curbing their power.
Notwithstanding this popular antithesis between
charities and business corporations, we assess whether the
former have more capacity for moral agency, in the context of
English law, than the latter. By ‘moral agency’, we mean a
capacity to act (from agere, to do or to act) on the basis of
moral judgements.1 Exploring the philosophical and legal
literature on this topic, we examine how English law restricts
(or enables) the ability of charities and business
corporations to exercise moral agency. In particular, we look at how
charity law2 constrains the capacity of trustees to exercise
1 Our understanding is that a ‘moral agent’ can act on a belief about
whether an action is ‘good’ or ‘bad’, not merely as the most efficient
means to an end, but in the light of considerations that are sensitive to
conscience. The archetypical ‘moral agent’ is the individual human
being; we later consider the sense in which an organisation itself can
be a moral agent.
2 Our focus in this paper is charity law, as it is here that the
constraints upon the moral agency of charities are first framed and
originate. Clearly, however, the wider ‘regulatory’ context is also
contributory, and, depending on how this is defined, this can be taken to
include everything from the law more generally, to ‘guidance’ issued
by regulatory bodies such as the Charity Commission for England
and Wales or the Information Commissioner, to sector ‘norms’, and
donor behaviours. While it is beyond the scope of the paper to have
taken a ‘broad gauge’ approach, such as a wider interpretation of
the ‘regulatory context’ would entail, we do acknowledge this in the
course of the article in relation to the role of the Charity
Commission for England and Wales : arguably the foremost ‘prime mover’ (or
‘framer’) next to the legal system itself.
their consciences when acting on behalf of the charities they
represent. We find that charity trustees are constrained in
the exercise of conscience in ways that shareholders of a
business corporation are not. Counter-intuitively, given the
popular characterisations we have highlighted, our argument
is that business corporations have greater capacity for moral
agency than charities.
In England, charities are a legally recognised form of
organisation, subject to particular legislative and regulatory
requirements
(Morris 2016; Harding 2014; Harding et al.
2014; McGregor-Lowndes and O’Halloran 2010)
.
Problematically for English charities, for it is thought to be associated
with lowering public trust in these organisations
(Radojev
2016a, b; Smith 2015; Charity Communications 2014)
, there
is a growing disconnection between the concept of charity as
applied in law and the public perception of what it is to be a
charitable or (...truncated)