Charity Commission is not regulating charities properly, report by MPs concludes

A report by the Public Accounts Committee says the regulator lacks a coherent strategy and is unable to adequately address its shortcomings

Charity Commission
Charity Commission

The Charity Commission lacks a coherent strategy and does not possess the ability to adequately address its shortcomings, according to the Public Accounts Committee.

The committee’s report into the work of the regulator, published today, says the commission is not regulating charities properly and has been "buffeted by external events".

The report says the commission’s strategic review in 2011 "failed to achieve a fundamental transformation of the organisation", and that its new chief executive, due to arrive later this year after the departure of the current incumbent, Sam Younger, "will need to bring about the much needed radical change in the commission’s culture and operations to restore confidence in the organisation’s ability to regulate charities effectively". Currently, the report says, the commission is "lacking strong leadership".

The report says the commission "said it was clear that it had to transform its culture and change its tone with charities by taking a more rigorous approach in its investigations, and recognising and dealing swiftly and decisively with abuse of charitable status".

According to the report, the commission's response to financial cuts has been "salami-slicing its activities rather than radically rethinking its purpose". It says that the regulator has repeatedly promised to improve but has failed to do so.

"In response to critical reports from this committee and our predecessors over the past 26 years, the commission has repeatedly said that it will get things right," says the report. "In practice, it has failed to implement our recommendations, its performance has not improved and the board has not exercised adequate oversight of the commission’s leadership when it failed to deliver the necessary changes."

The report also says the commission "does not know how much it spends on each of its key functions, and it does not have a system for recording the time spent by staff on different activities". 

It says that the commission is taking steps to create this data using "outside expert advice as it does not possess the skills internally". The commission agrees with the PAC that this data "would be essential to inform any proposals for a radical transformation".

The report echoes many of the criticisms made of the commission by the National Audit Office in its investigation into the regulator’s work, published in December, such as that the commission "is too willing to accept what charities tell it without verifying or challenging the claims made, and it does not appropriately prioritise its limited resources to investigate the most serious cases of potential abuse of charitable status".

The PAC report also says the commission "has continued to make poor use of its powers" and investigations, including those into the Cup Trust and Afghan Heroes, are "too slow and inefficient". It criticises the commission's low level of enforcement action, saying that it has not removed any trustees, only twice suspended a trustee and stopped charities entering into specific transactions only 17 times over the past three years.

The commission should make better use of its statutory powers, the report says, including "making better use of the intelligence it already holds on charities to identify risks, improving how it prioritises the use of its resources and responding more quickly to serious concerns in individual charities".

The report also tells the commission that "if it is being asked to do too much with too little, it should clearly set out its case for additional resources to government". The commission had told the PAC in an evidence submission that new powers it is due to be granted under an ongoing consultation would boost its effectiveness, but the report says that the process "did not enable it to identify any significant activities which it could discontinue or pass to other bodies".

"Nothing we heard convinced us that things have changed significantly since we last examined the commission, and we are concerned that it does not possess the capability to put right its problems and address its failings," the report says. 

The PAC says it will return to review the commission's progress in a year's time.

Click here to read how the Charity Commission has responded to the report.

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