The regulator needs to be more relaxed and to learn to take setbacks in its stride, says Nicola Evans, a senior associate at Bircham Dyson Bell
Martin Luther King once said: "The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy".
These words might strike a chord with the Charity Commission, which has had its fair share of challenge and controversy recently, in terms of both its ongoing strategic review and dealing with the challenge from the Independent Schools Council in the Upper Tribunal to parts of its public benefit guidance.
The tribunal's decision, which was published in October, seemed to be hailed by all sides as a victory. The Charity Commission claimed as much in its statement, which said: "We are pleased that, in its judgement, the tribunal agrees with our interpretation of the law on the key issues."
On 2 December last year, the tribunal found that key parts of the commission's guidance on public benefit should be quashed. But visitors to the regulator's website would have been unaware of this until 21 December, when it published a statement saying it had withdrawn parts of the guidance.
In deference to concerns raised by the commission that a quashing order would "attract ill-informed headlines and give rise to general misunderstanding, not necessarily limited to the effect of the decision", the tribunal, in its order of 2 December, allowed the regulator to withdraw the relevant parts of the guidance, failing which the quashing order would be made.
Although the commission made no statement on its website at the time, a spokeswoman for the regulator was reported as responding: "We have received the Upper Tribunal's decision and, in accordance with this, will be voluntarily agreeing to withdraw the limited parts of our guidance found by the tribunal not to be correct". These parts were duly withdrawn just before Christmas.
The commission's responses in this case raise a number of concerns. First, its report on the decision failed to mention that the tribunal found parts of its guidance to be "wrong". Similarly, the commission did not "agree to withdraw" parts of its guidance "voluntarily"; it did so under threat of a quashing order if it failed to withdraw them.
This is disappointing communication from the Charity Commission; but perhaps of more concern is why the regulator should feel it has to be defensive. Yes, the guidance has to be revised - but so what? This has practical and logistical implications, but there has been no suggestion of any wrongdoing by the commission.
There seems to be a widespread consensus that the regulator's statutory duty to issue guidance in pursuit of its public benefit objective is a difficult and thankless task. The commission accepted from the outset that its interpretation might not be right, in which case it could be challenged in the tribunal - something it appeared to welcome.
Slings and arrows
Its response to the tribunal decisions could simply have been: "The guidance contains an interpretation of the law. The tribunal says that we need to change parts of it, so we will." If parts of the media then say the commission got it wrong, why should that matter? It might be hoped that, being a well-established organisation - and not subject to competition or a public vote - the commission would feel comfortable dealing with the slings and arrows of media assault.
Otherwise, Lord Hodgson's review of the operation of the Charities Act 2006 might provide an opportunity to address some concerns. One possibility might be to require the Charity Commission to take a neutral stance when its publications (and, perhaps, its decisions) are challenged in the tribunal. This would enable the commission to explain its position, but would remove the need to defend it.
Perhaps the process before the tribunal should be inquisitorial, rather than adversarial. The Charities Act 2006 established a structure that was designed to secure the commission's independence, but perhaps the regulator will seek additional comfort. We should have a Charity Commission that welcomes challenges and weathers controversy as no more than symptoms of a robust and healthy regulatory regime.
Nicola Evans is a senior associate at Bircham Dyson Bell