House of Lords select committee on charities
On 25 May 2016 the UK House of Lords appointed twelve of its members to a Select Committee created “to consider issues related to sustaining the charity sector and the challenges of charity governance”. The announcement follows concerted criticism of the UK Charity Commission, particularly in relation to its efficiency, and the UK charitable sector itself, following a recent report released by the regulator showing that “Public trust and confidence in charities has fallen to the lowest recorded level since monitoring began in 2005”.
Terms Of Reference
The Select Committee on Charities is currently calling for evidence “from interested individuals and organisations” on the following:
- the main pressures currently faced by charities, and the impact these pressures have;
- the skills required to lead and manage a charity;
- the role trustees should play in the performance and effectiveness of a charity;
- the role of national and local Government with the charitable sector;
- the role of the Charity Commission;
- charities’ accountability to their beneficiaries, their donors, and the general public;
- effective delivery of services;
- current challenges to the financial sustainability of charities; and
- innovation particularly in the digital arena.
The Select Committee held evidence sessions on 12 July 2015, before which representatives of the Charity Finance Group, the Association of Charitable Foundations, the Association of Chief Executives of Voluntary Organisations and the Small Charities Coalition appeared. Throughout the evidence sessions, representatives of the sector consistently criticised the change of the Charity Commission’s role from “being a champion and cheerleader of the sector to being the policeman”. Furthermore, there was a clear sense that there is an increasing need for charities and an increased regulation of the sector, while less funding, government grants, less support and guidance is available to the sector.
The representatives of the UK Charity Commission who appeared before the Select Committee on 5 July acknowledged that there had been a change in policy and the Commission now has a greater focus on compliance. Interestingly, according to the Commission’s Director of Policy and Communications, “the majority of our compliance work stems from poor understanding and poor decision-making” with the Commission only encountering “a small number of cases of deliberate abuse—cynical, nasty abuse where people have used a charity for criminal or abusive ends”. The representatives also state that the Commission has a focus on “enablement” through providing “formal guidance, informal guidance, cases, tips and hints” to trustees. The Commission’s representatives acknowledged that they, along with the Sector, “have great deal of work to do there to make the public feel confident that they can trust charities because they feel confident about what is done with the money”.
The Australian Charities and Not-for-profit Commission (ACNC), according to Krystian Seibert, has found a workable balance between facilitation and regulation. The ACNC, according to Seibert who was involved in the establishment of the ACNC when acting as an advisor to the Assistant Treasurer in 2012 and 2013, “is more than… and was always intended to be…” more “than ‘a cop of the beat’”. Seibert argues that the proactive establishment of the ACNC, done in consultation with the sector, “shepherded a regulatory culture fit for purpose”. Despite facing initial opposition to its establishment, today the ACNC “enjoys broad support” from both the “government and stakeholders”.
The Select Committee is still receiving submission and is due to report back to the House of Lords by no later than 31 March 2017.