Regulating for a stronger sector

In the latest of our series of blogs on the House of Lords Select Committee on Charities, I turn my eye to the question of regulation.

The final chapter of the Lords report is something of a broad church. It covers a multitude of actors, from the Office for Civil Society to devolution and Brexit. The very last section – a mere 31 paragraphs long – addresses itself to the regulation of the sector.

It should be noted that the Lords here use ‘regulation’ to mean the Charity Commission. While any charity will swiftly point out that they are subject to any number of other regulators – from the Care Quality Commission and Ofsted to the Pensions Regulator – an investigation into all of these would have doubled the length of the Committee’s report.

Prior to the publication of the report, I had expected the role of the Charity Commission to figure highly. It is possible this was partly due to the fiery exchange between Lord Foulkes and William Shawcross when the latter came to give evidence, but also because the Charity Commission is the topic of much conversation (and often concern) in the sector.

The Commission Board

We recommend that the Commission is mindful of the example it sets to the sector and that when filling future vacancies it explicitly seeks to recruit individuals with a range of skills, charity experiences and demographic characteristics, such as age, gender, ethnicity and geography.

In what was normally a very cordial committee, the exchange between Lord Foulkes and William Shawcross on the diversity of the Charity Commission board stood out somewhat. It is worth stressing this is not a limited to Lord Foulkes. Many in the sector expressed their unease at the fact the only board member with experience of running a charity – Claire Dove (who was also the only BAME member) – stood down from the board and was not replaced by anyone with commensurate experience.

If the Charity Commission wants charities to do better when it comes to diversity, the Lords stressed the importance of them setting a positive example. This is not just about experience, but a cross cutting diversity. ACEVO has long been calling for greater representation on the Commission board for those who work in charities, and the Lords report only serves to strengthen our resolve that this is the right thing to do. Certainly, when new appointments are made, it would be a dereliction on the part of the Commission were they to fail represent a range of views and experiences.

Supporting Charities

We recommend that the Commission makes clear that those charities which are proactive in reporting issues to them will be supported to help put things right.

One of the criticisms levelled at the Commission since 2015 is that it has become excessively focussed on its enforcement function, at the expense of providing support to charities. This followed a recommendation made by the Public Accounts Committee in 2014. The Committee noted that this new ‘tougher’ approach had led to some charities not seeking guidance in case it gave rise to the perception that they had done something wrong. This lack of trust in the regulator is an impediment to the effective regulation of the sector.

The Committee did not go as far as many in the sector in suggesting that the Commission should rebalance their approach. Instead, they identify a need for the Commission to be honest about the level of support it can provide, and help signpost charities towards the most appropriate external sources of advice. This would provide a compromise between the current position and the desires of the sector, while also being alive to the realities of the Commission’s funding.

Charging

We have grave concerns about the Commission proceeding with any proposal to charge charities. We recommend that the Charity Commission makes clear how a charge would benefit charities and strengthen the sector overall.

This was not a report which had headline recommendations. But, if it had done so, their section on charging would no doubt have been one of them. Given that it had been only a week since the Treasury had given the green light to a consultation on the issue, the Lords issued them with a stern caution.

They had concerns around the danger of any charging burdening smaller charities which are unable to afford it. They felt that the Commission did not sufficiently understand the impact which charging would have upon the sector, and nor did they understand how expectations of them may change as a result. There was a clear concern that, if charging were introduced, it could have a detrimental impact on the strength of the sector, including public trust and confidence in charities.

It seems axiomatic that the Commission should have to consider these factors before they embark on any regime of charging charities. Certainly, failure to do so would almost certainly see them lose any current support that such a scheme has within the sector. Until we see details about what the Commission is proposing, it is difficult to take a view on whether it is appropriate. We hope that, following the Lords’ comments, the consultation on charging will hold further details on the proposals and an analysis of the impact they will have – both on the sector and on the Commission’s work. This would set the ground for meaningful engagement with a well informed sector, who are able to take a position based on fact not supposition.

By Simon Dixon, Policy Officer

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