New Era of Higher Standards Signalled by Charity Commission

Commercial Article

12 October, 2018

This week the Charity Commission unveiled its new five-year strategy laying down what it believes its role to be, what goals it wishes to achieve and how it aims to achieve them. The strategy signifies a change in tone that charities should take note of given the Commission's wide-ranging powers.

Baroness Stowell, the new Charity Commission chair, has outlined her belief that too many charities are getting away with meeting the bare minimum standards legally required of them, and that such an attitude cannot be allowed to continue. Her vision includes a demanded that charities "be a living example of charitable purpose, charitable attitude and charitable behaviour…they must act like a charity, not just call itself a charity because of the aims it has and the work it does. Charitable aims cannot justify uncharitable means".

Stowell goes on to explain that her new focus and higher ideals is based on on a need to use the Commission as a force to serve the public, and deliver on public expectation that charities "hold themselves to the highest standard of charitable behaviour". The strategy acknowledges that these standards have been allowed to slide in recent years, directly leading to a declining trust from the public in the work the Commission does.

If charities continue to allow this decline, Stowell has no illusions that charities will find themselves increasingly at risk of losing the benefits their charitable status allows. She makes it clear that "being a registered charity will need to amount to more than it does today if that status is to survive, let alone thrive".

Amounting to More

The Commission's new strategy is quick to acknowledge that it is not just charities that will need to change how they operate going forward, but the Commission too will need to make some changes to its function if it is going to stay relevant.

"The commission cannot afford - literally or metaphorically - to see the fulfilment of our statutory functions as the totality of its mission. We must be able to demonstrate what we stand for in ways that chime with people's lives, concerns and interests…We must be an organisation led by purpose"

To achieve this ambitious goal, the Commission Strategy outlines five Core Strategic Objectives to focus its efforts for improvement. These are:

Holding Charities to Account - Certainly the key theme of the strategy, the Commission will begin to take more of a leadership role in requiring charities to act ethically and do more than just comply with minimum legal standards.
Dealing with Wrongdoing and Harm - The Commission hopes to adopt "good information analysis" and harness new technologies to conduct investigations faster and more efficiently and to also ensure no complaint is left ignored.
Informing Public Choice - The Commission aims to do more with its data than simply publish an annual return and maintain its online register, and will begin to allow easier access to its other datasets in a bid to make the Commission's work truly open to the public.
Giving Charities the Understanding and Tools to Succeed - Rather than provide basic guidance in a form that is applicable to every charity equally, the Commission will begin producing more targeted guidance, particularly in high-risk areas, to allow greater understanding of how a charity to utilise the most benefit from their resources.
Keeping Charities Relevant - the final objective is a promise to "lead the thinking about how charities can thrive in a changing world", and be a better champion for charities in the public eye.

The Charity Commission's Regulatory Powers

Currently, the regulatory powers of the Commission give them power to oversee and supervise charities to ensure compliance with charity law and make sure charity assets are being used properly and legitimately. These powers are wide-ranging and can cover the power to call for documents and search a charity's records, disclose their findings to any local authority, the police or HMRC as appropriate, and of course the power to remove and disqualify any charity trustee.

These powers, however, often have less effect on exempt charities (for example providers of social housing, museums, or higher education institutions). Not only do various regulatory requirements not apply to exempt charities, but exempt charities are also not subject to direct regulation from the Commission. Instead, exempt charities only become subject to the Commission when the charity's principle regulator (usually a government department) asks the Commission to intervene. The commercial reality of this elongated and more lenient process is that it is often these exempt charities that allow standards to fall, knowing that the likelihood of enforcement action is less than that of registered charities.

Such exempt charities should not ignore the Commission's most recent announcement and new approach, particularly any reference to needing to do more than the bare minimum legal requirements to maintain charitable status.

Reaction

Early response to the Commission's strategy is so far generally positive, with various charities acknowledging standards have been left to slide for too long. Peter Kelner, chair of the National Council for Voluntary Organisations, has commented "Britain's charities retain a level of trust that many other national institutions can only dream of. Nevertheless, as Baroness Stowell says, those levels of trust have seen a modest decline. It needs to be reversed."

In short, whilst the new Commissioner's vision may be light on detail it shows a clear signal of intent, and is an obvious indication that the charities landscape is set to change in the coming months and years, most likely with tougher obligations on Charities to uphold their ideals and justify their continued existence.

Forbes regularly advises on matters concerning Charity Law and procedure. If you have concerns over any practices within your organisation, contact us at ciaran.rafferty@forbessolicitors.co.uk to find out more about how we can help.

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