Sectoral Challenges: Exploring Regulatory Dialectics in Charity Performance Reporting Regulation

ABSTRACT To reduce information asymmetry and maintain public trust in charities, they are strongly encouraged to communicate their good work, with many jurisdictions considering whether and how to regulate performance reporting. New Zealand and the United Kingdom are early developers of new governance‐type performance reporting requirements—using co‐regulatory tools to enhance the regulators’ legitimacy and thus, charities’ compliance. We explore how this regulation has developed, framing our analysis with Kane's regulatory dialectics, which argue that regulation is developed through a series of repeated, cyclical (often antagonistic) interactions between regulators and regulatees. We find that new governance‐type performance reporting regulation exemplifies the stages of Kane's regulatory dialectics but that important differences associated with new governance regulation led to a more partnered and less adversarial process. When repeated interactions are facilitated through co‐regulation, regulatee representation on regulatory bodies, formal and informal interactions, and regulatee advocacy for regulatory developments, the boundaries between regulator and regulatee become blurred. This impacts significantly on the resulting regulation and potentially improves acceptance of (and compliance with) mandatory requirements. We propose a model of new governance regulatory dialectics that can support practitioners in developing new governance regulation, and further research and theorization of this important area.