The voluntary sector should expect to see increased scrutiny from donors and the public during the cost-of-living crisis, the Charity Commission has warned.
Helen Stephenson, chief executive of the commission, said that potential extra scrutiny was part of “a test of leadership and resolve” the sector was likely to face in the coming months.
Stephenson was speaking today at an online meeting of gofod3, the annual event hosted by the Wales Council for Voluntary Action, during which she also said that work to transfer assets out of dormant charitable trusts had recovered £80m since 2018.
Experts have forecast that inflation could reach 11 per cent by the end of this year, creating what Stephenson called “one of the toughest economic climates in a generation”.
She said: “The cost-of-living crisis may have a profound impact on charities across Wales and England.
“It is to charities that many families will turn for help when they find it difficult to pay the bills. At the same time, many of those who previously donated regularly and generously to charity will feel the pinch in the months ahead, and some may curtail their charitable giving.
“For some charities, this may mean facing a double squeeze of increased demand and reduced income.”
Stephenson also said: “I believe that the challenges you face are not just going to be about making ends meet and securing the donations and funding you need to continue your work.
“I think the months ahead will present a wider test of leadership and resolve.
“Scrutiny of charities and their management, especially their financial management, may well intensify, and if that happens leaders will need to explain their decisions openly and with integrity.”
She told the event that the commission was “not going to pounce on a charity just because of media scrutiny or because important people have concerns about it”, but added: “We cannot protect charities from legitimate scrutiny or from criticism for mistakes or misjudgements.”
Stephenson also announced that the commission would be rolling out the Revitalising Trust programme in Wales, saying the pilot programme for recovering unused assets at community foundations in England had released nearly £80m since 2018.
This is four times the estimated value of the scheme when it was first announced as part of the government’s Civil Society Strategy.
With the Welsh government backing the scheme in Wales, Stephenson said: “We hope to help release thousands of pounds, maybe hundreds of thousands of pounds, perhaps millions, that are just sitting idly in charities’ accounts.”