Stephen Cook: Will the real Charity Commission please stand up?

Three documents send out mixed messages about the way the regulator handles its relationship with charities

Stephen Cook
Stephen Cook

The Charity Commission has been busy recently, and it’s instructive to examine three of its latest publications for their differences in style and message. The first is the regulatory alert of 3 March, issued after the news that two charities had funded Cage, the pressure group that has suggested that Mohammed Emwazi, aka Jihadi John, had been radicalized by his contact with the security services; the second is a statement the commission issued on 6 March about charities funding Cage; and the third is an operational case report from 10 March on the Beatbullying Group, the charity that went bust last year.

The regulatory alert is a measured, helpful and factual reminder to trustees that they must undertake reasonable due diligence to protect the funds and reputation of their charity when making grants to non-charitable bodies. It reminds them that the funds should only be used for activities that further the purposes of the charity, directs them to commission guidance on decision-making by trustees, and points out that some charitable purposes such as community development and the promotion of human rights can be difficult to interpret. All very sound.

The statement on charities funding Cage is a different kettle of fish. It says the commission is concerned that the past funding of Cage by the Roddick Foundation and the Joseph Rowntree Charitable Trust risks damaging public trust and confidence in charity, and that recent public statements by Cage have increased that risk. "In these circumstances, the commission took robust action and required further unequivocal assurances from the two charities that they have ceased funding Cage and had no intention of doing so in the future," it says.

It then goes into detail about how JRCT did not initially provide within a 24 hour deadline "an unequivocal assurance that the trust would not make any future grants to Cage under any circumstances", but did eventually give an assurance that "it will not fund Cage either now or in the future."

There are two notable aspects to this document. The first is its punitive tone and the way it dwells on the interchanges with JCRT, leaving the impression that a charity is here having its nose rubbed in it in public. No wonder the JRCT said in its own statement that it had been subject to "intense regulatory pressure" and that some charity lawyers say privately that this statement "smacks of regulatory muscle."

More seriously, the statement raises the concern that the commission is fettering the discretion of trustees. Normally it quite rightly insists that trustees’ discretion is paramount – as, for example, in the setting of senior pay levels - and here it appears to restrict that discretion. Charity lawyers are asking what power the commission was exercising when it required the JCRT to give unequivocal assurances about its future decisions, and feel that no explanation has yet been offered.

Similarly, the statement says the commission expects that "all charitable funds are used according to their charity’s purposes and in the way that the public would expect." This is an alarming proposition, surely. Who is to be the arbiter of what the public would expect? Different parts of the public expect different things. If the arbiter is to be the board of the Charity Commission, the way would be open for it to rule out funding of causes it deemed unpopular. And yet one of the most important roles of charities is to espouse causes that are not popular, concentrating instead on principle and morality, and challenging prevailing views and policies. What would happen, under such a regime, to charities supporting refugees and migrants or seeking effective methods of rehabilitating paedophiles? The adoption of unpopular causes by charities does not in itself damage public trust and confidence in charity - the issue is more subtle than that. Again, the commission has offered no rationale for this aspect of its statement.

The third document, the operational case report on the BeatBullying Group, is different again. This was a charity that was a darling of the government, which gave it £1.3m three years to expand its activities, but went out of business late last year when grants it was counting on failed to materialize. The report asserts that  it is up to the trustees to make decisions that a reasonable body of trustees would make "and we found that they had done this and had fulfilled their duties." And yet a few sentences earlier the report says "BeatBullying was not in compliance with its own reserves policy and had no reserves." It is hard to avoid the implication here that the commission considers it a reasonable decision for a trustee board to ignore its own reserves policy.

Overall this report, laced with sympathetic remarks about BeatBullying’s well-meaning attempts to avoid its regrettable fate, reads like a throwback to the days when the commission was more indulgent towards charities, and not like a product of the brave new world where "robust" is the watchword and the commission’s chief executive has said that charities should no longer get the benefit of the doubt.

How well do these three publications sit together? The speculation might be that the first was produced by the lawyers, the second was more a reflection of the views of senior board members, and the third may suggest that approved charities can escape robustness. But, all in all, the situation is quite confusing: could the real Charity Commission please stand up?

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