Supplementary memorandum from the Charity
Commission (DCH 302)
CHARITY COMMISSION—THE
FUTURE
1. The Joint Committee has asked for a further
paper setting out how the Charity Commission will develop its
internal processes (or be given a "new lease of life"),
and the structural changes we are making in the light of the Bill.
This paper focuses on the implications of the draft Charities
Bill for the Commission's work. In essence the core principles
informing what the Commission does and the way we do it will be:
— Transparency and accountability.
— Learning and continuous improvement.
— Improved regulation through better
use of knowledge and information.
— Targeted and focussed management.
— Proactive dialogue with the sector.
— A regulator which listens and learns.
Taken together these will build trust and confidence.
2. We also have to recognise that other
critical factors affect the context in which we work, and these
include:
Non legislative recommendations made in the
Strategy Unit Report[51]
and the Government's response.[52]
The Commission is implementing some of the changes recommended
which did not require legislation[53]
for example by:
— opening a Welsh Office;
— piloting a Standard Information Return
for larger charities;[54]
and
— moving to new governance arrangements,
by separating out the governance and management functions of the
current Chief Charity Commissioner role. (See Annex)
Changing expectations of the role of modern
regulators. These expectations[55]
emphasise:
— regulators working together to create
frameworks which enable and encourage self-regulation and streamlined
approaches; and
— better regulatory principles—including
risk and proportionality.
— From autumn 2004 online registration
will be available for new applicants for charitable status.
— From 2005 all charities will be able
to complete their Annual Returns to the Commission online.
— We have piloted making governing documents
and accounts for certain charities available electronically and
we are working with Guidestar UK[56]
to extend this coverage.
— Spending Review 2004. Our settlement
assumes that expenditure for 2006-07 and 2007-08 remains at the
2005-06 level. This includes the costs of implementing the Bill.
The Commission has commenced a strategic review to ensure we meet
these tight targets and are a fit for purpose organisation.
3. Our plans will be developed by the new
governance and management team whose responsibility it is to agree
a strategy for the future in consultation with the public and
charities. Our high level vision is a Commission which:
— Establishes and operates a clear
regulatory framework which encourages good practice and self regulation
by charities, and is accessible and fair.
— Seeks to measure impact and encourage
sustainability.
— Demonstrates open communication,
through dialogue with charities, the public and others with an
interest in our work.
— Operates as an organisation which
has a culture of learning and sharing knowledge to ensure continuous
improvement.
— Reinforces its partnerships with
other regulators across sector boundaries to avoid duplication
and provide added value.
4. When the Bill is enacted our work will
build on our four new regulatory objectives:
— Public confidence—to increase
public trust and confidence in charities.
— Compliance—to increase compliance
by charity trustees with their legal obligations in exercising
control and management of their administration of their charities.
— Social and economic impact—to
enable and encourage charities to maximise their social and economic
impact.
— Accountability—to enhance the
accountability of charities to donors, beneficiaries and the general
public.
Public confidence
5. We have commissioned research to understand
better what determines public trust and confidence in charities
and how that relates to the Commission. We will set in place an
on-going process which uses this research to inform the Commission's
practices and our relationship with charities in an evolving way
Compliance objective
6. Our priorities and allocation of resources
focus on intervening where we can make most difference to charities
and the people who benefit from them. The proposals within the
draft Bill will enable us make a step change in developing this
approach. (See submission DCH 19)
7. We have already made considerable progress
in developing our regulatory approach, for example by:
— Focussing more of our review visits
and regulatory assessments on larger charities;
— Self-certification procedures for
trustee remuneration and trustee indemnity insurance, and once
the Bill is enacted, trustee payments.
8. We will achieve a greater regulatory
impact by taking a more tailored approach to certain groups of
charities because of their specialised nature. We already do this
for NHS, armed forces and Common Investment Fund charities. In
the future the approach could include:
— groups of charities previously excepted
from registration such as some church groups; and
— distinct groups of charities, such
as the Scrutiny Committee's observation about grant-making charities.
9. We work closely with regulators who have
an interest in charities. We host a Forum of 25 regulators connected
to the sector. We will build upon these relationships, working
more closely with other regulators who may be better placed to
regulate on our behalf. In the short term we do not anticipate
this work affecting the overall number of regulators and their
activities, although in the medium term we believe there may be
merit in exploring broader alliances of not for profit regulators.
10. Examples of our existing joint working
include:
— Holding joint seminars with the Charity
Finance Directors Group on the draft accounting requirements for
charities.
— Collaborating with the charity trustee
networks on improving charities' governance arrangements.
11. We will explore ways in which a better
or more cost effective service can be provided through using charities
and their umbrella bodies.
12. We are developing a customer network
to improve our service delivery to different groups. As part of
this work we are building an inclusive list of faith, black and
minority ethnic and secular groups to consult, test products and
publications and provide general feedback on our work.
Social and economic impact
13. The draft Bill provides opportunities
for charities to make themselves more effective by giving them
freedom to:
— implement decisions about administrative
arrangements in their trusts; and
— use a power to spend capital or to
wind up through more streamlined mechanisms.
14. We will:
— develop processes to respond effectively
to charities when our approval or authority is needed (for example
authorising Schemes);
— adapt our monitoring procedures to
fit with the legislative requirements; and
— continue to identify inactive charities,
with a view to bringing their assets properly to account or remove
them from the register where appropriate, releasing dormant funds.
15. Our communication is proactive. We use
our newsletter and website to explain the progress of the draft
Bill. We will also continue to publicise other initiatives of
benefit to charities—such as our work with the Giving Campaign—and
we will seek further signposting opportunities with other organisations
to enable charities to be more effective.
16. The aim of this new objective is to
describe how we work with charities to promote the effective use
of charitable resources. In answer to the query posed by the Scrutiny
Committee we would not object to a different form of words, if
they still secure the effective use of charitable resources by
enabling us to help charities which want to increase their impact
by changing and adapting.
Accountability objective
17. We support charities by providing information,
guidance and advice on what the law requires and on good practice.
We have a good base line for providing information direct to all
charities. In 2003-04 there were:
— 18.5 millions hits on our website.
— 220,000 calls to our Contact Centre.
— 10,000 responses to email requests.
— 28,000 pieces of tailored advice
through individual casework.
18. We will make the distinction between
what is a regulatory requirement and what is good practice clearer
by, for example:
— using web developments; and
— new forms of presentation and layouts
for our booklets.
19. Primary legislation provides the high
level framework for accountability. This is supported by secondary
legislation covering detailed requirements for accounting and
reporting. We will work in partnership with charities to develop
a relevant framework and appropriate forms of accountability.
CONCLUSION
20. The process leading up to the Bill has
broken new ground with positive and inclusive consultation with
the sector. We want to continue to promote that new way of working,
in meeting our new regulatory objectives. In summary we will be
accountable for our work and that of charities which will in turn
lead to public trust and confidence.
15 July 2004
51 Private Action, Public Benefit-September 2002. Back
52
Charities and Not-For-Profits: A Modern Legal Framework-July
2003. Back
53
www.charity-commission.gov.uk/spr/cordcb.asp Back
54
The Standard Information Return is a SU recommendation asking
the largest charities (those with an income over £1 million)
to say how they set their objectives and measure their success. Back
55
Imaginative thinking for better regulation Better Regulation
Task Force (September 2003). Back
56
Guidestar UK is a charity which will provide a website providing
comprehensive information about charities and the not for profit
sector. Back
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