UK Charity Regulator Under Fire
4 December 2013 at 3:10 pm
The UK’s charity regulator has come under fire for not being tough enough on charities in an annual national audit of its operations.
According to a report by the UK National Audit Office (NAO), the UK Charity Commission is not regulating charities effectively, it fails to take tough action in some serious cases and makes poor use of its powers.
The report called, The regulatory effectiveness of the Charity Commission, says the spending watchdog recognises that the Commission carries out important and necessary work but finds that there is a gap between what the public expects of the Commission and what it actually does.
The report comes on the first anniversary of the establishment of Australia’s charity regulator the Australian Charities and Not-for-profits Commission (ACNC).
The NAO has concluded that the Commission does not do enough to identify and tackle abuse of charitable status.
“The Charity Commission uses its information poorly to assess risk and often relies solely on trustees’ assurances. Where it does identify concerns in charities, it makes little use of its powers and fails to take tough action in some of the most serious cases,” the NAO report said.
The NAO concludes that this undermines the Commission’s ability to meet its statutory objective to increase public trust and confidence in charities and that the Commission is not delivering value for money.
“Between 2007-08 and 2013-14, the Commission’s annual budget fell 40 per cent in real terms to £22.7 million but the number of main registered charities has remained fairly constant at around 160,000," the report said.
“In response to budget cuts, the Commission has reviewed how it works and successfully reduced demand for its services, but it has not identified what budget it would need to regulate effectively.”
The report says the Commission makes little use of its enforcement powers, for example suspending only two trustees and removing none in 2012-13. And it can be slow to act when investigating regulatory concerns.
The NAO found cases where periods of several months passed during which the Commission took no action. Furthermore, it says the Charity Commission does not take tough enough action in some of the most serious regulatory cases. It is also reactive rather than proactive, making insufficient use of the information it holds to identify risk.
Among the NAO’s recommendations is that the Charity Commission thinks radically about alternative ways of meeting its objectives with constrained resources. It also needs to make greater use of its statutory powers in line with its objective of maintaining confidence in the sector; and develop an approach to identify and deal with those few trustees who deliberately abuse charitable status.
“The Charity Commission has responsibility for protecting the good name of the charity sector as a whole, as well as other specific duties. It is too passive in pursuing this objective and in making the case for the resources to allow it to do so effectively,” the head of the National Audit Office, Amyas Morse, said.
“We welcome the early plans for a reset of its approach and strategy being proposed by its new Board, and encourage them not to fall short of the radical change of pace and rigour which is evidently needed.”
The Charity Commission responded to the claims saying it is committed to an urgent program of reform, building on the last strategic review and its current strengths.
“The Commission has already taken steps to improve our approach to tackling the most serious cases of abuse and mismanagement in charities,” Chief Executive of the Charity Commission, Sam Younger said.
"I recognise what the NAO report says about the need for improvement in registrations and our compliance and investigations work, and we have already made progress in implementing their recommendations.
“I agree that we must sharpen our approach to handling the most serious cases that involve deliberate abuse or mismanagement of a charity. Such cases seriously undermine public trust in charities generally, and as regulator, we must identify and handle them effectively. We must also make better use of our own data to drive proactive work.
“The Charity Commission has complex tasks – as registrar, enabler and tackler of abuse in a large, diverse and almost entirely voluntary sector.
“The challenge before us is to identify which areas of activity should be reduced further to free up the extra resources to meet the NAO's recommendations on registrations and investigations.
“I would also welcome a wider debate about the implications of the report for the Commission's priorities and approach."
Download the National Audit Office report: