Examination of Witnesses (Questions 40-59)
MR JOHN
STOKER AND
MR SIMON
GILLESPIE
WEDNESDAY 28 NOVEMBER 2001
40. The next question refers to figure 14 on
page 29 of the report. In the bottom right-hand corner there it
states that the follow-up for charities not returning their accounts
and annual reports will take place for those whose annual income
or expenditure is over £100,000 if the return is two months
late. They are referred to the Enforcement Unit. Does that mean
that you never follow-up those with an income between £10,000
and £100,000?
(Mr Stoker) No. All charities get reminders. They
get reminders on annual returns being due at the eight month period,
in other words two months before they fall overdue, and at the
ten month period. What then happens really on the basis of risk
is we concentrate enforcement activity on £100,000-plus.
If, however, there was some sort of reason that came to our attention
from any source, whether it was our monitoring or somebody who
told us about something they knew, then certainly we would not
refrain from chasing up a smaller charity's accounts.
41. But if you do not chase them up, and this
is the case and you have asked for them, what will happen, even
though it is a statutory responsibility?
(Mr Stoker) They will continue to get reminders.
42. That is all, you just go on and on reminding
them that they have not sent in the accounts?
(Mr Stoker) It is really a question of priority. The
Enforcement Team does look at the larger charities on grounds
of cost, but one of the recommendations that is made in the NAO
Report which will affect this is we might address this issue simply
by putting the record, the filing record, of charities on the
website. That is something that we can do, indeed it is something
that we have done. In a sense there is an element of name and
shame. If anybody then goes to the Register and looks at a particular
charity's entry they will be able to see that charity is overdue.
43. But that is the only action you take. If
a charity has an income or expenditure in your view between £10,000
and £100,000 it may get named and shamed and reminder letters
but no other action is taken to ensure that it sends in its accounts,
even though perhaps by that time it has gone over £100,000?
If the last report was four years earlier it might now have an
income of more than £100,000.
(Mr Stoker) If the last report was four years earlier
we will have been chasing it to see if it was still active.
44. Sending reminder letters.
(Mr Stoker) The number of charities in those categories,
of course, since 1999 has come down very considerably from something
over 18,000 to something around 700 at the time of the report
here. There is that action which has certainly affected a number
of charities in this category.
45. Those ones you are talking about here are
the ones where you have heard nothing at all. You may have heard
that they have sent in their annual report and who are the trustees
and that sort of thing but have not actually sent in the accounts.
(Mr Stoker) I think we would regard that as odd.
46. I should hope so.
(Mr Stoker) That might well get chased up. The fact
is there are lots of things that could bring these charities to
our attention and when we have got a reason to chase them we will.
The fact is also although there are 120,000 of these charities
below £10,000 a year, so they are very large numerically,
it does come back to the fact that they only account—
47. I am talking about the ones between £10,000
and £100,000.
(Mr Stoker) Even they only account for something like,
I think, five per cent of charitable incomes.
48. I am still concerned if all you do is send
follow-up letters. I entirely take your point that it is more
important to go after the bigger ones first and if they are two
months late you immediately get after them but I would have thought
there should be some procedure under which even those between
£10,000 and £100,000 you do not leave them forever with
just follow-up letters or putting it on the web.
(Mr Stoker) I accept that is an entirely reasonable
point of view. I think what this comes back to ultimately is the
fact that resources are not infinite, that we have a limited but
I think perfectly reasonable envelope of resources to use. As
I said in response to the Chairman's question earlier, that does
mean prioritisation and that does sometimes mean things taking
a lower as well as a higher priority. I can perfectly understand
the rationale of your feelings on that but it does come down to
hard decisions about priority.
49. But the priority surely grows as the length
of time since they last submitted something grows?
(Mr Stoker) Yes.
50. And, therefore, eventually they become a
higher priority I would have thought than some of the others higher
up?
(Mr Stoker) Yes, which is why we have got the arrangement
that when they have been out of touch with us for four years—
No, I beg your pardon. If you are talking about £10,000 and
£100,000, if we have not had any submission from them for
four years then they will come into the arrangements for identifying
inactive charities,[3]
which has been very successful in getting things down from 18,000-odd
to 700 at the time of this report and less now.[4]
51. Can I come on to those because I was interested
in what I call the obsolete charities as well. Firstly, why as
long as four years because that does seem quite a long time for
a charity to be out of touch? In my experience of these things
if a charity has been out of touch for that long it is probably
because the last trustee has now died and it is difficult to get
in touch with anybody. Who remembers four years later who was
the trustee of a particular charity? People lose their treasurers,
do they not, and you find bank accounts without anybody able to
sign the checks.
(Mr Stoker) I think the point here is there is an
interaction between the enforcement arrangements on charities
that do not send in their accounts and the arrangements on charities
that do not send in their Register updates. If one of the charities
that has been out of touch for as long as four years has also
been of a significant size financially it will actually have fallen
foul of the chasing arrangements and enforcing arrangements for
the £100,000-plus charities that apply to accounts and annual
returns. It will not have been left there without attention, it
will have been chased for its accounts and returns and that would
have had the effect of chasing it for its Register update.
52. That is quite true of the ones over £100,000
but there must be an awful lot of charities, I would have thought,
that are quite wealthy in terms of their assets but have not got
a great income or expenditure that were set up in the 1850s or
whatever and may have grown in terms of the assets over a long
time and nobody has been doing anything with that money for a
long time. If that sort of situation occurs you could be putting
quite large sums at risk if you leave it very long before you
look into why they have not been in touch with you.
(Mr Stoker) I would expect that to get flushed out
by accounts monitoring because any charity which has actually
got very large amounts of assets is likely, in the nature of things,
to have large amounts of income.
53. To get £100,000 income you would have
to have a very large amount of assets if you are just doing nothing,
many millions of assets.
(Mr Stoker) But if it is over £10,000 and it
has large amounts of assets and the amount of its expenditure
in relation to its income is small then it will trip a trigger
and it will generate a referral from the monitoring group to be
further investigated by various bits of the Commission.
54. Are you talking about after four years or
because you have not had the accounts in? I thought it was only
over £100,000 income that you actually look at if it has
not got the accounts in. What I am saying is you could have just
under £100,000 income on a very large asset base and you
would not look at it for four years.
(Mr Stoker) It is possible but, again, it is quite
difficult to envisage in the abstract. I would expect charities
basically with very large asset bases to have appreciable income.
55. They would but your income is never going
to be more than, whatever it is, five per cent of your asset base.
Can we go on from that. Of the 18,800 charities that you have
removed from the Register between September and 2001, according
to paragraph 4.6, how many of those were removed and how many
have you re-established contact with?
(Mr Stoker) I am afraid I do not have that split to
hand but I would be quite happy to—
(Mr Gillespie) I can fill in the detail there, if
it is helpful, Mr Rendel. Of the nearly 19,000 we established
contact with the vast majority of those and we are now down on
a year to date figure of 495 of those 18,800. About half of those
charities, of the order of 9,000, are still existing, are still
running quite happily, they just had not bothered to tell us effectively.
The other 9,000 we have removed having done checks to make sure
there are no significant assets there.
56. So what has happened to the remainder? Even
if they are not significant they have probably got something.
Did they just disappear, you have lost contact with them?
(Mr Gillespie) I think this becomes an issue of the
risk management, that we have to make a decision on whether we
think it is significant enough to go after it.
57. So what you are saying is that nobody does
because it is too small for the Charity Commission and in practice
if one of these charities becomes obsolete and it is a comparatively
small amount of money nobody follows it up, that money just sits
in a bank account and it is forgotten about.
(Mr Gillespie) That is not entirely the case because
we have a pilot project that we are starting up now to try to
identify exactly those pools of money. We have recognised that
as a potential problem and we have got action in hand to try to
deal with it.
Mr Rendel: Thank you.
Chairman: Thank you very much, Mr Rendel. Jon
Trickett.
Jon Trickett
58. I would like to follow up a couple of things
that Mr Rendel raised. The charities which have been deleted from
the Charities Register, do you have an estimate of the amount
of assets which they held?
(Mr Stoker) I do not have an estimate unless my colleague
does but, by definition, the judgment would have been that they
were not significant.
59. Presumably they were deleted because you
had not heard anything from the trustees? Rather than that they
had minimal assets, or is that not a factor?
(Mr Stoker) The process is not that you delete them
from the Register simply because you have not heard from them.
The process is because you have not heard from them you establish
what has happened to them, whether they are operating or not,
whether they have any assets, and then you reach a judgment according
to what you find. What you find may be the case described by Mr
Rendel, that effectively the charity ceased to operate and it
is extremely difficult to tell precisely what has happened to
assets which were there. If those were significant we would go
after them.
3 Ev 18-19, Appendix 1. Back
4
Note by witness: As of 31 October 2001, the number of charities'
active status to be confirmed stood at 495 out of the 18,800.
Ref Q 55. Back
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