NAO Follow-up on the Charity Commission: read beyond the headlines

In what feels like a very short time frame, the NAO has reviewed the Charity Commission’s progress against the findings of its 2013 report ‘The regulatory effectiveness of the Charity Commission’.

For the past year, the Commission has been working head down to address the damning conclusion that it was not regulating charities effectively and was not delivering value for money.

The NAO’s overall verdict is a positive one, concluding that the Commission has made substantial progress on almost all the previous recommendations. To have achieved such a change is testament to the serious turnaround work the Commission and its staff have been engaged in and deserves recognition.

So what are the key findings?

The Commission has made overall progress on nearly all the NAO’s previous recommendations:

• it’s concentrating its resources on compliance and tackling abuse (as demonstrated by the fact that statutory inquiries are up from 15 in 2012-13 to 64 in 2013-14);
• it’s making more effective use of its powers, especially its information gathering powers and enforcement powers;
• it’s making better use of data and exchanging more information with other public authorities (particularly the police and HMRC);
• it has improved its follow up checks on registration and operations cases, alongside its existing investigations monitoring (although the NAO also points out that there have been a number of cases where the Commission has closed cases without having checked that trustees had acted on its instructions);
• it has developed unit costs for its activities, to measure the cost of regulating the sector (although the Commission needs to do more to fully measure the relative benefits of different activities, and how much it costs to regulate effectively);
• it has developed a new business model to focus its resources on regulating on high risk cases, in line with its overall aim of becoming a risk-based regulator.

A glaring red mark is however the rise in delays to registering charities: the Commission is taking longer to register charities and has not met its targets in this area, so there is an increasing backlog of unprocessed applications that the Commission need to address.

But keep on reading

An interesting recommendation by the NAO is to the Commission’s board:

‘to keep under review its level of involvement in executive decision making’

While justifying this by the immediate need to provide the leadership and tackle the most urgent problems, the NAO rightly points out the dangers of such a situation prolonging: if the board continues to be too involved in the day to day activities of the Commission, the independence of executive vs. non-executive functions is seriously at risk.

This echoes NCVO’s concerns about the Commission’s independence and current direction of travel, something that as announced before Christmas we will be looking at in more detail.

What’s missing?

This NAO report is a fairly dull read – it certainly won’t send the same shivers across the Commission or the sector like its predecessor did.

But where are the many important strategic documents mentioned throughout the report? Apparently over the past 6 months the Commission has produced:

• a new risk model with key regulatory risks against which charities are being assessed (since August 2014);
• a 3-year change programme;
• a ‘Statement of Regulatory Approach’ (the latest one I can find was published in 2012).

I have searched the Commission’s new website and none of these documents have been announced or published. This raises serious questions about the Commission’s transparency, something that many in the sector already feel has been thrown in the bonfire of priorities.

The Commission was once praised for its engagement and level of communication with the sector, but its current focus is very much on getting the job done. This is understandable given the NAO’s scrutiny. But it is worrying when the regulator of a sector that prides itself on being independent is not itself independent, and while charities are striving to be more transparent they are not informed about important documents that will steer the Commission’s work and its relationship with the sector.

In order to maintain the confidence of the sector, it’s crucial that the Commission publicises its work and strategic documents, as well as key performance indicators and progress measured against them. Only by knowing how the Commission is operating and what its priorities are, can charities understand its decisions and actions.