Our review of the Charity Commission’s governance

I am writing today to explain NCVO’s plan to conduct a review of the Charity Commission’s governance structure and its board appointments process.

It is eight years since the Commission was restructured under the Charities Act 2006, and while that legislation did much to improve charity law, its reforms to the Commission’s governance have created some new problems.

Politics

The revised structure replaced a small board of Commissioners comprised of lawyers and civil servants with a more diverse board, with the intention that the Commission would become more responsive. In doing so, the law opened up the pool of potential Commissioners for the government to select from. Subsequent boards, and particularly chairs, have been subject to the accusation that as appointees of the government of the day they are in some way politically biased. One does not have to accept that these accusations have any merit in order to see that they can be damaging.

If the charity regulator is perceived to be political, it has the effect of casting a shadow over charities more generally. It is damaging to charities’ long-term interests for there to be any doubt about our distance from party politics. We cannot afford for our regulator to be anything other than beyond all suspicion.

The risk of perception of bias is even more important in light of the additional powers for the Commission contained in the new Protection of Charities Bill.

Our aim is to find ways to make sure the regulator can put questions about its political neutrality to rest for good. We want to ensure that the Commission can never again be accused of political bias in its work.

Comparisons

Our review will consider how the Commission’s governance is structured, including its relationship with government, the appointment process for board members, and the respective remits of the board and the executive.

We are particularly keen to compare how other regulators are structured and administered and see what there is to learn from existing alternative models.

Funding, governance, operations – all go hand-in-hand

Questions of governance go hand-in-hand with the issue of the Commission’s funding. Any funding mechanism for the Commission, including the current one, has the potential to raise questions about the Commission’s independence from government or from the charities it regulates. We are hosting a roundtable meeting to discuss all the options for the Commission’s financial future at the end of this month. This will help inform our thinking.

As well as an independent regulator, we need one that has the funds necessary to be effective. Again, it could damage our sector’s reputation if charities are perceived to be ineffectively regulated.

It is clear to me that reforms to the Commission’s financing or governance cannot be made in isolation. Changes to either aspect would affect the other and would need to come as part of a package of measures to strengthen the Commission. I hope we can come up with proposals that would together enhance the Commission’s independence, accountability, and financial security.

Our review will also consider whether any other aspects of the Commission’s work would benefit from further scrutiny – for example its guidance for charities on various issues, or its customer operations – and make further recommendations.

This is not a criticism of the Commission itself

I wish to emphasise that this is in no way a criticism of the Commission’s current board or staff. They are operating under a framework created for them by others. The Commission’s structure is defined by statute and its operations are constrained in many ways by central government, which sets its budget. The board and staff of the Commission are working hard at a time when the attention on them is growing and their budget is shrinking. The strategy the current board are implementing – an assertive approach to malpractice – is the right one.

Campaigning

Separately, we intend also to review the broader environment for campaigning, following the general election. We will consider the consequences of the Lobbying Act, as well as looking at the regulation of campaigning more broadly, drawing on international comparisons. We intend to launch this work following the general election in order to draw fully on the experiences of members during the regulated period of the Lobbying Act.

I would like to hear from you

The review of the Commission’s governance will be conducted by NCVO guided by an advisory panel with relevant expertise and I expect it to conclude in summer 2015.

We will be keen to hear evidence from NCVO members and will be in touch with you soon. If you have questions or thoughts in the meantime, I would be most glad to hear them. You can comment beneath this blog post or email me.

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Stuart Etherington Sir Stuart Etherington has been chief executive of NCVO since 1994.

8 Responses to Our review of the Charity Commission’s governance

  1. Pamela Ball says:

    I welcome this review and share many of the concerns that prompted it. In reviewing the Commissions guidance to the sector overall, it would seem an ideal opportunity to have leadership with regards to a robust review and MODERNIZATION of required and recommended charity governance models and regs. For too long the commissions guidance and requirements reflect an old fashioned ”management committee” model that is only suitable for small unincorporated community groups . Charity Commission guidance and laws have not kept up with the times with regards to the need for charity governance to be both robust, values based and corporate. Too many charities are held hostage or led to unsustainablity by poor governance .This COULD be addressed with a root and branch review and changes within Charity Commission rules and guidance.
    Thank you for an opportunity to share my thoughts. I am happy to discuss governance and sector leadership with Stuart or other appropriate staff.
    Pamela S.Ball

  2. I note that the CC make a great play of the importance of good governance within those organisations that they regulate. Rightly so. However, surely it is also important that the CC itself adopts good governance fit for purpose, independent and an exemplar beacon light to guide all others.

  3. Ray Kohn says:

    Expecting differentiation between working against the effect of a tragedy (eg children dying) as opposed to its cause (eg an oppressive regime) is absurd. Yet the lobbying bill seems to expect trustees to apply this absurdity. I would hope that Commissioners might see that the differentiation is legally absurd and seek to ensure that all charities can retain their status when tackling the root causes of the tragedies being tackled in any way that is within their objectives.

  4. Dr. Mira Lal says:

    The Charity Commission should continue to retain its position as an Independent regulator and receive adequate funding without compromising its role. Good luck for your campaigning.

  5. Very interesting and appropriately timed piece of work. Of course for anything to really change it will once again come down to politics. Democracy, autonomy, rights to challenge and change, regulations, frameworks and commisioning do not make for easy bedfellows.
    We need to have confidence in governance, from No:10 to the Boardroom and unfortunately the media seems saturated with stories of breaches of trust.
    So many people are disenfranchised that it is difficult to see how we resolve the symptons without addressing the root causes.

  6. As an independant governance advisor and application type bod:
    I was saddened to see the new website of the charity commission. this was not so much the integration into the .gov portal but the way in which the site has become opaque and difficult to use, also it has not improved the application process.
    .
    But what I find most odd about the commission is the way in which all applications seem routinely to be referred, this feels to me as if the commission is on a mission to justify its staffing level or limit the range and intent of charitable activity. If it is the former then the system and process is effectively broken; the advice available before application is either not sufficient or just plain wrong and although I have always found staff helpful there have been occasions where we end back where we start having made a series of small changes to wording. I have followed an application to acceptance and then used this as the basis for my work with another organisation only for the wording to be questioned.

    More worrying is if the application process is subject to moods and whims that are limiting what is acceptable as “charitable”. There has been a lot of navel gazing following the public schools and church groups tribunals; this seems to have resulted in a shift towards scepticism but with no new general guidance after the publication of the results of the inquiries. To say that the Commission is not political (or subject to Politics) is naïve; it is subject to law and summary appointments and dismissals of the board in the same way as the Lottery or ACE or various Boards of Trade. The issue here is how much clarity there is around these whims and how nascent charities can be helped to negotiate the landscape without coming a cropper by sounding to socialist (at the moment!)

  7. Colin South says:

    I am so glad that this review is taking place. It is timely. There has been considerable change over the last ten years in response to new social and political pressures and the growth in the number of registered charities. It is important that the increasing complexity in legislation is matched by the ability of the Charity Commission to provide support and guidance, monitor compliance and take any necessary action to ensure compliance and it is necessary for any increasing complexity to be the product of a consultative, deliberative and informed process. The governance of the Charity Commission needs to be as free of party politics as possible but cannot be apolitical; it needs to have its finger on the pulse of social change and current legislative process but not to be driven by either. All of this being pointless unless the resources are made available in staffing and staff development to deliver the function that is required of it.

  8. Sandy Medway says:

    I welcome such a review. There have been many positive changes by the CC in recent years but I worry about the direction of travel, particularly as it begins to over burden centuries old traditions of rapid responsive Christian voluntary work and small community groups meeting huge needs amongst the most poor. There are many elements making up the very large Third Sector. Larger charities paying huge salaries in smart offices need a regulator but smaller organisations and voluntary groups doing a lot with very little need something different.