The Charity Commission is not regulating charities effectively, according to the National Audit Office’s report ‘The regulatory effectiveness of the Charity Commission’.

We have been expecting this report for months, following a string of knock downs to the Charity Commission:

• top of the list, of course, is the ‘Cup Trust’ scandal, the effects of which are still rippling through the sector and government;
• our chief executive Sir Stuart Etherington spoke about the sector’s concerns about the Commission’s performance and credibility,  particularly its handling of the case and how this revealed a deeper culture issue;
  
• a Public Accounts Committee hearing questioned whether the Charity Commission is fit for purpose and tasked the NAO with carrying out a full inquiry;
  
• the PAC itself has already published a very critical report about The Charity Commission: the Cup Trust and tax avoidance.
  

Key findings and recommendations

So what does the report say? Well, it certainly doesn’t pull any punches. Here are the key findings and recommendations.

On the Charity Commission:

• it makes little use of its statutory enforcement powers
• it can be slow to act when investigating regulatory concerns
• it doesn’t take strong enough action in some of the most serious regulatory cases
• its default approach is to rely heavily on trustees’ assurances and be very lenient towards them, on the assumption that most are volunteers who act in good faith (even where evidence suggests trustees may be intent on abusing charitable status)
• it is reactive rather than proactive, making insufficient use of the information it holds to identify risk
• there are challenges to the Commission’s efficiency (particularly due to its management structure and IT system)
• although the Commission and HM Revenue & Customs have an information‑sharing agreement, but neither has shared all the information possible.

Conclusions

The NAO’s overall conclusion is pretty damming: it says that the Commission is not delivering value for money. From the NAO’s perspective, this is the strongest criticism.

From NCVO’s – and the sector’s point of view – far more worrying are the following conclusions:

• the Commission is not regulating charities effectively and it doesn’t do enough to identify and tackle abuse of charitable status
• 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 Commission is too passive in pursuing its objectives, letting practical and legal barriers prevent action, rather than considering alternative ways to prevent abuse of charitable status
• the Commission is not meeting its statutory objective to increase public trust and confidence in charities.

So, what next for the Charity Commission? Our Director of Public Policy, Karl Wilding has some thoughts about the future.

See NCVO’s comment to the press about the NAO report.