Your two-minute guide to the NAO report

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:

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.

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Elizabeth Chamberlain Elizabeth is head of policy and public services at NCVO. She has been part of the policy team since 2008, as the expert on charity law and regulation. Her policy interests also include charity campaigning, the sector’s independence, transparency, and accountability.

7 Responses to Your two-minute guide to the NAO report

  1. Sue Quinn says:

    We have seen the Charity Commission in action and demonstrate all the bullet points above. Recent events have led over 40 people in October from a local community to raise concerns with the Charity Commission over regulatory concerns of a charity which owns a building. The trustees have not called an agm for nearly 2 years, 3 of the 5 trustees are part of a private company using the building while the charities objectives, young people are excluded. Photographs of the trustees enjoying themselves have been posted on FB while the trustees drive it into bankrupcy. The CC say they have concerns and trying to get a meeting withe trustees, have asked for minutes, accounts and management accounts. There could have been quick solutions to this issue but now the community who have used this building since 1987 could loose this valuable asset.

  2. Dave Smith says:

    We were badly hit by the collapse of Charity Giving earlier this year, and have not yet received one penny from the £6,500 that had been collected from sponsored events through them.

    Apparently they had not submitted accounts for two or three years. What I don’t understand is how the Charity Commission could fail to investigate that, given that they were a conduit for hundreds of thousands of pounds on behalf of small charities like ourselves? If we had known our money was not safe, or even that there were question marks over them, we would never have used them for future events.

    It makes you wonder what the Charity Commission is there for, if it cannot spot blatant misuse of funds.

  3. Derrick Harmer says:

    Words fail me – but very obviously not Mr Shawcross. Requires a totally fresh set of commissioners who have been fully vetted and changes to the commission’s remit in order that some effective control over charity organisations is re-established.

  4. I am bound to agree with those parts of the report that the CC has not always been as active as it should have been when faced with the facts. In a case I presented to it (a Norfolk-based charity founded by both local charities, individuals and county council employees, but admininstered by the council children’s services department) it took 10 years to agree closure. During that time, I discovered that the charity had no regular income, had taken no steps to ensure same, and was not fulfilling any of its aims and objectives. The CC relied on trustees to confirm the facts, although they were obvious from those annual returns that had been made.
    In another less serious case, a former county-based registered charity continued to describe itself as ‘registered’ when it was not. (This was obvious from the CC’s website.)

  5. Lin Patterson says:

    Before leaping onto a bandwagon, I wonder if the CC is suffering from staff shortages resulting from cuts, making investigation and follow-up more difficult?

  6. Lin Patterson says:

    If so, it would not be the first of our institutions to be undermined by underfunding to breaking point, then hammering with accusations of inadequacy, leading to privatisation or takeover.

  7. Pingback: Questions on Charity Commission effectiveness | VoluntaryNews