Editorial: A busy week for the Charity Commission

It is getting more money and new powers, but the changes it proposes to the annual return raise questions about its structure, writes Stephen Cook

Stephen Cook
Stephen Cook

There has been a flurry of announcements concerning the Charity Commission this week: it’s getting an extra £9m from the government over the next three years, the draft bill has been published that will give it new powers, and changes to the annual return made by registered charities have been announced. The first two, in their way, are welcome news; the third is more contentious.

The announcement of the extra money leaves no illusion about its purpose, which is "strategic risk-profiling, proactive monitoring and investigations". To a large extent, this is likely to be about charities at risk of being involved in terrorism in some way – you don’t, after all, get money out of the Treasury for much else these days. It is also to some extent a vote of confidence in the commission’s much-questioned capacity to be an effective regulator.

The draft bill contains the main extra powers that the commission needs to disqualify errant trustees and issue warning to charities, but does not contain the powers it wanted to stop disqualified trustees from taking other key jobs in charities and to direct trustees not to take actions it thinks will result in mismanagement. The legislative process will offer a chance to try to restore these measures. The new powers look like common sense.

The main changes in the annual return charities have to make to the commission from next year involve declaring how much income they get from national and local government, whether they have a policy on paying staff and whether they have reviewed their financial controls. The last of these seems a sensible reminder, and the first two are not necessarily a great imposition and could help to concentrate minds.

But they are also an indication of how connected the commission has become to media and political agendas. The pay question looks like a way of reminding charities about the fuss about chief executive salaries that was started by The Daily Telegraph, and the one about income from government ties in to scepticism in some quarters about service delivery by charities.

But the most contentious aspect is that the commission is only postponing rather than dropping its proposal, roundly rejected by charities in a consultation, to require charities to declare how much they spend on campaigning. This determination to persist with the proposal prompted Sir Stuart Etherington, chief executive of the National Council for Voluntary Organisations, to say that the commission needed to proceed carefully "in order to avoid giving the impression that it is doing the bidding of a handful of unjustified critics of charity campaigning". Sir Stephen Bubb, head of the chief executives body Acevo, talked of "pandering to a meaningless and infantilised debate that suggests charities should put up and shut up".

The proposal does indeed seem to have more to do with ideology than effective regulation. A few Conservative politicians are determined opponents of campaigning by charities, and one of the commission’s board members is the originator of the now resonant phrase that charities should "stick to their knitting".

It used to be said that the commission, which is meant to be an independent regulator, was political under its previous chair, Dame Suzi Leather, who was a member of the Labour party. Many now feel that, ironically, it is rather more so now, albeit in different ways. The question of the commission’s vulnerability in this respect was raised by the eminent charity lawyer Stephen Lloyd, in an article written just before his tragic death in the summer.

He argued that the commission should revert to its structure before the change in 2006, when commissioners were replaced by a board and chief executive. The effect would be, he said, to put policy matters back in the hands of the chief commissioner, who in the past was a senior civil servant and therefore considered impartial. The chief commissioner could be advised on policy by a board that was strictly advisory, wrote Lloyd.

This proposal is surely worth considering, given current events and the importance of preserving the independence and impartiality of the commission. Another question worth looking at is whether there should be statutory definition of the matters to be included in the annual return, which are currently at the commission’s discretion entirely. It could in theory start requiring charities to declare what colour they paint their front doors.

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