It has been a challenging summer for the charity sector. While the refugee crisis in Syria has reminded us of the central role of charities in bringing relief to the needy and giving a voice to the desperate, concerns about fundraising practices among some of the biggest, most respected organisations in the sector have barely been out of the news. Furthermore, the high-profile collapse of Kids Company – and the closure, albeit more quietly, of the British Association for Adoption and Fostering – brought concerns about charity capacity in a stretched funding environment, and the quality of governance and financial management by charity trustees, into sharp focus. The last few months will have shaken the public’s trust and confidence in charities. It has also demonstrated that a strong and effective regulator is crucial to ensuring that confidence is maintained. This is the task of the Charity Commission and we must do it well.
Our job is to give guidance to all trustees on their legal duties in managing their charity’s finances, reputation and property; to investigate when concerns about mismanagement, misconduct or negligence by trustees arise; and to work with other agencies to protect charity assets and beneficiaries. But we cannot sit alongside charity trustees and make decisions for them about how to run their charity. The law doesn’t permit that, our resources don’t allow it, and no one seriously thinks it would be right.
At our annual public meeting on Wednesday we will give a progress report to stakeholders on how we are further strengthening what we do. We have set an ambitious goal: to become a proactive, risk-based regulator, increasing our efficiency and growing our expertise. Investment from the treasury of £8m over three years will deliver new digital services, making it easier for charities to deal with us, and allowing us to focus more of our resource on higher risk work such as fraud and terrorist abuse of charities and safeguarding children and vulnerable beneficiaries. Trustees and the public will see real improvements in how we deal with them. New technology will also help us make better use of data to deliver this proactive, risk-based approach to regulation.
When there is serious misconduct, we are investigating more quickly and applying our regulatory powers more effectively to force a solution. The numbers speak for themselves: last year we used our regulatory powers 1,060 times compared to 188 times the year before; in 2011-12 we opened 12 investigations, last year 103. We have used powers that range from suspending trustees to freezing bank accounts. We monitor charities we are concerned about more effectively, by visiting premises, inspecting financial records or opening compliance cases.
The commission also now makes more robust checks before registering a new charity, and where we must register a charity because it satisfies the legal test but we have concerns about how it will operate in practice, we now monitor more carefully.
We don’t currently have all the tools we need to prevent abuse; the charities (protection and social investment) bill currently before parliament will strengthen our powers – and close some absurd loopholes, so that anyone convicted of serious terrorism offences, money laundering or bribery are automatically disqualified from becoming a trustee.
The best route to preventing problems in charities in the first place is accessible guidance to make it clear what trustees have to do to comply with legal and regulatory norms. We can no longer give one-to-one bespoke advice to the extent we were once able, but we will continue to support trustees by giving them the information and tools they need, improving the clarity and focus of our guidance and using new ways to reach them. We recently revised one of our key publications, the Essential Trustee, our new approach was well-received and our work to increase awareness effective. Around 600 people a day view that guidance – which sounds promising until you consider there are almost a million trustee positions in England and Wales.
The spotlight is on trustees as perhaps never before, and they need to fully understand and embrace their role and responsibilities. Take fundraising, for example. The Etherington review, shortly to report, is likely to recommend radical changes to strengthen and renew the self-regulation of fundraising. At the same time we will be revising and strengthening our guidance for trustees to make it crystal clear that they are ultimately responsible for their charity’s fundraising practices. Charities can outsource the delivery, but they cannot outsource the responsibility for treating their donors with care nor the risk to reputation if they fail to do so.
I will be reporting good progress at Wednesday’s public meeting, but also telling our stakeholders that we have much more to do and no time to waste. The Charity Commission is important because of the part we play in upholding public trust and confidence in charities. Whatever else we learned this summer we know that confidence must never be taken for granted.
