The role of the Charity Commission
Natalie Johnson considers how the CC's role has evolved during the era of austerity.
Have you ever wondered what the role of the Charity Commission is? Maybe you have asked the Charity Commission for help or advice, and they have suggested that you speak to your lawyers? Perhaps they would have helped you "back in the day", but now they are suggesting that you go elsewhere?
The Charity Commission's budget has been cut by 50% in real terms since 2007. It is therefore unsurprising that it has had to re-focus its resources. In short, the Charity Commission has decided that it needs to focus on what only it can do. Its priorities for the last 3 years have been developing the compliance, accountability and self-reliance of the sector.
The Charity Commission has five statutory objectives:
- to increase public trust and confidence in charities;
- to promote awareness and understanding of the operation of the public benefit requirement;
- to promote compliance by charity trustees with their legal obligations in exercising control and management of the administration of their charities;
- to promote the effective use of charitable resources;
- to enhance the accountability of charities to donors, beneficiaries and the general public.
In its Strategic Plan for 2012-15, the Charity Commission identified the following core activities:
- the registration of charities;
- generic guidance;
- statutory advice and permissions;
- transparency through charity annual returns; and
- investigation of alleged wrongdoing.
Charity registration - reforms
In 2014, the Public Accounts Committee criticised the Charity Commission for "performing poorly and failing to regulate the charity sector effectively". The Charity Commission responded by making the registration process more stringent. Anyone who has recently applied to register a charity may have noticed that the online application form is a lot longer than it used to be. It often takes longer to register a charity as well.
The Charity Commission is still producing generic guidance. Recent publications include:
- The essential trustee: what you need to know, what you need to do (CC3);
- Charity reporting and accounting: the essentials;
- Conflicts of interest: a guide for charity trustees;
- Ex gratia payments by charities;
- Statutory inquiries into charities: guidance for charities;
- Public benefit guidance.
Although the Charity Commission's guidance should not be taken as law (and some of the legal statements in its guidance have been challenged in recent years), it is often helpful. The chosen topics reflect some of the Charity Commission's statutory objectives and core activities. Recently, the Charity Commission has emphasised the need for charities to consider taking specialist legal advice.
Schemes & Consents
The Charity Commission does still provide schemes and consents, but nowadays it is often necessary first to persuade them that the charity does not have power to do whatever it needs to do without a Charity Commission scheme or consent and this can take some persuasion. There has been a seeming reluctance on the part of the Charity Commission to issue statutory advice of late. This may be down to resourcing issues or it may be an attempt to encourage charities to become more self-reliant.
The annual return has also been "beefed up", and now asks a lot more questions that it once did, including whether charities have certain policies, such as risk management, investment, vulnerable beneficiaries, conflicts of interest, volunteer management and complaints handling policies. This may reflect the Charity Commission's desire to increase charities' accountability as it helps them identify areas of risk. It may also be a sign of wanting to be seen to take steps to ensure that charities are well run.
The Charity Commission has opened far more statutory inquiries in the last couple of years than it did in the few years before that, including class inquiries into "double-defaulters" (i.e. charities which have failed to submit annual return/annual accounts in two of the preceding five years).
Policing the charity sector
In a speech in 2013 the Chair of the Charity Commission, William Shawcross, described the Charity Commission's "primary role as policeman of the charity sector". Gone are the days when the Charity Commission had the budget to be part-advisor, part-regulator. While this change may feel uncomfortable, it is important for the reputation of the charity sector as a whole and public trust and confidence in charities that charities are well-regulated and well-run. The responsibility for good regulation rests with the Charity Commission. The responsibility for being well-run lies with the charities themselves.
If you would like to discuss any aspect of this article further, please contact Natalie Johnson of the Wrigleys' Charities and Social Economy team on 0113 244 6100.
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The information in this article is necessarily of a general nature. Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors