House of Commons - Public Accounts - Twenty-Eighth Report

Select Committee on Public Accounts Twenty-Eighth Report

CHARITY COMMISSION: REGULATION AND SUPPORT OF CHARITIES

MANAGEMENT

9. The functions and duties of the Charity Commission are set out in the Charities' Act 1993, which requires the Commission to encourage the efficient and effective use of charitable resources and to safeguard them for beneficiaries. The Charity Commission's overriding aim is to promote public confidence in the charitable sector. [5]

10. The public relies on the Commission for assurance that the charities to which they donate money are properly run and effective.[6] However the Commission suggested to the Committee that its role is first and foremost to support and promote charities.[7] The Commission pointed out that it is explicitly prohibited under the Charities' Act from engaging in the administration of a charity, that there is a legal dimension to its role, as reflected in its origins, as an effective substitute for the former Chancery Court, to provide legal services for charities, and that the Commission's relationship with the charitable sector reflects the independence of charities and the fact that it is for trustees to decide how to fulfil their charitable objectives.[8]

11. The Commission spent around £13 million on staff in 1995-96. Of the Commission's 600 staff, more than a quarter were employed on charity support work. Only 8 per cent worked on investigations and a similar number were employed on charity monitoring. The Commission told the Committee that this was sufficient because the investigation function was now more sharply targeted, particularly at cases of abuse and maladministration.[9]

12. We asked about the balance of resources between the Commission's main functions and management. Nearly one third of its staff worked on resource management which included personnel, training and finance and other areas, such as information systems. The Commission considered that this balance was also about right, and told the Committee that senior management was not a large component and was contributing to the Commission's effectiveness.[10]

13. The Charities' Act 1993 created important new powers and requirements, including new reporting and accounting arrangements and extra powers for the Commission to use in investigating charities and safeguarding charitable resources.[11] The National Audit Office found that the Commission had made limited use of some of the powers, although their potential use was proving an effective lever in the course of some investigations[12]; the Commission had not yet set indicators and targets to reflect the requirements under the Act[13], and intended to consider how to enforce the requirements from February 1998, by which time the first accounts under the new legislation should have been submitted.[14]

14. The Commission's structure was reorganised in 1995 to improve its management, and a regional operations manager was put in charge of each of the Commission's three offices, with an executive director to pull together operations across the Commission through a management committee.[15] Even so, the Commission achieved only eight of 22 performance targets in 1995/96, half of its targets in 1996/97, and expected to meet only two-thirds of targets in 1997-98, despite the strengthened legislation and the process of improvement and development which the Commission described in evidence.[16] The Commission explained that this reflected the range of targets set and the process of development, for example of the new monitoring function, but it recognised the need to devote attention to improving performance.[17]

15. All registered charities with an annual income or expenditure of over £10,000 are now statutorily required to submit annual accounts and returns to the Commission, with the first returns expected from the beginning of 1998.[18] The Commission has undertaken considerable investment in new information systems in recent years, including the development of a new charity database at an estimated cost of £1 million, and an integrated computerised monitoring system costing more than £150,000 to help in handling the inflow of information.[19] The development of the annual returns and the procedures for dealing with them involved sending thousands of questionnaires to charities.[20] The National Audit Office found that the Commission did not pursue individual causes of concern arising from the questionnaire returns systematically as part of the testing, for example to help develop the links between monitoring and the support and investigation divisions. Important documentation and information to assist development was thereby lost or not fully followed up.[21]

16. The Commission told the Committee that the monitoring pilots were developmental and supported the design of a comprehensive monitoring framework which was enabling the Commission to engage with the charitable sector in a meaningful and productive way. Information from the returns had been used, but not in an integrated way, since the additional work involved in pursuing individual causes for concern had not been seen as a priority.[22]

Conclusions

17. The Commission achieved only 8 out of 22 performance targets in 1995-96 and only half of its targets in 1996-97. We consider that this continued failure to meet the majority of its existing targets shows a lack of management grip, as does the failure to realign performance indicators and targets in the light of the Charities Act 1993. We urge the Commission to show more drive in exploiting the opportunities for greater effectiveness which the 1993 legislation provides.

5 C&AG's Report para 1.8 Back

6 Q 127 Back

7 Qs 89-90 Back

8 Qs 94-95 Back

9 C&AG's Report para 1.7 and Figures 8 and 9. Q 94 Back

10 Qs 117-123. Evidence, Appendix 1, p21 Back

11 C&AG's Report paras 1.11-1.12 Back

12 C&AG's Report paras 4.17- 4.20, Figure 34 Back

13 C&AG's Report para 2.33 Back

14 C&AG's Report para 2.32 Back

15 Q9 Back

16 Evidence, Appendix 1, p20 Back