DCH 302 Charity Commission
BRIEFING PAPER FOR THE JOINT COMMITTEE ON THE DRAFT
CHARITIES BILL
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[57]
and the Government's response[58].
The Commission is implementing some of the changes recommended
which did not require legislation[59]
for example by:
opening a Welsh Office,
piloting a Standard Information Return
for larger charities[60],
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[61] emphasise:
regulators working together to create
frameworks which enable and encourage self-regulation and streamlined
approaches
better regulatory principles - including
risk and proportionality.
E-Business developments.
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[62]
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 twenty-five
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,
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
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
60 key publications
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.
Charity Commission
15 July 2004
Annex
Charity Commission - New Governance arrangements
The SU report's recommendations and the draft Bill's
proposals enable the Commission to adopt governance arrangements
which improve strategic oversight of the organisation, protect
our independence and act as a real impetus for driving through
change. Specific changes include:
(i) Splitting the role of Chair
and Chief Executive. The Commission has moved to the new
governance arrangements which shadow the changes proposed in the
draft Bill, by appointing, in July 2004, Geraldine Peacock as
Chair designate and Andrew Hind as Chief Executive. The
separation of governance and management reflects current best
practice, giving improved checks and balances within the organisation.
(ii) A corporate structure with
a larger non-executive Board. We will recruit up to five
new non-executive Board members, using co-option in advance of
the Bill to ensure a broader range of skills and experience. This
will enable us to better reflect and benefit from the diversity
of the sector and of society.
(iii) Open Meetings. The
draft Bill includes provision for an open AGM at which to present
our report and answer questions. As part of our commitment to
open and outward facing communication we will hold open Board
meetings from September, complemented by regional meetings to
provide increased access to the public.
57 Private Action, Public Benefit - September 2002 Back
58
Charities and Not-For-Profits: A Modern Legal Framework - July
2003. Back
59
www.charity-commission.gov.uk/spr/cordcb.asp Back
60
The Standard Information Return is a SU recommendation asking
the largest charities (those with an income over £1m) to
say how they set their objectives and measure their success. Back
61
Imaginative thinking for better regulation Better Regulation
Task Force (September 2003) Back
62
Guidestar UK is a charity which will provide a website providing
comprehensive information about charities and the not for profit
sector
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