In-depth

The Charity Commission can't do everything

Governance | Rosie Chapman | 22 Apr 2010

Rosie Chapman from the Charity Commission offers a reality check on the capacity of the sector's regulator.

I'm thinking of creating a virtual charity-regulator game. You begin with £30m, 450 staff, and 180,000 charities to regulate. 

You could split resources between:

• using guidance, advice or legal powers to enable charities to work effectively;
• registering new charities;
• ensuring that all charities understand and operate for their purposes and the public benefit;
• obtaining and scrutinising accounts;
• identifying, investigating and resolving really serious problems; and
• providing accurate public information about charities.

There are things you must do, such as keep an up-to-date register, ensure that charities submit accounts, deal with serious issues, and raise awareness and understanding of public benefit.  You must cover your core running costs. Oh, and there are annual budget reductions. If someone disagreed with your actions, they could take you to a tribunal, resulting in legal costs or a fine. Of course, a player could quickly find they had spent everything on one or two activities (for example scrutinising 70,000 accounts, leaving no resources to resolve any problems they found). 

So much for the fantasy. Our daily reality is that we have to effectively regulate a sector for which trust and confidence are vital, in the face of ever-rising public expectations and ever-diminishing resources. We never did, and certainly never will, have sufficient resources to do everything, so we set priorities by assessing what are the greatest risks to charities and to public confidence in them. Fortunately we have many years’ experience of doing this.

One of the greatest threats to the integrity of charities is serious abuse, including fraud, money laundering, links to terrorism, or abuse of vulnerable beneficiaries. Such occurrences are thankfully rare, but absolutely unacceptable. Mostly our role is to provide the right guidance for charities, such as our new compliance toolkit, to prevent them from being exploited.

But there are other threats such as charities failing to deliver on their purposes and public benefit. This is the reason for the emphasis on public benefit in the Charities Act. All charities now have to demonstrate the public benefit they bring and report on it in their annual trustee report for everyone to see. To fulfil our responsibility under the Act, we have produced a wide range of public benefit guidance to help charities, and have begun carrying out assessments to ensure that charities really do what they say.

We could spend all our time looking at charity accounts, but this wouldn’t be the best use of our resources. In the first instance it’s the responsibility of charity trustees to prepare accounts and an annual report which explains to their beneficiaries, and the public more generally, how they have spent their money. By publishing these accounts and information about public benefit on our website, we enable the public to question, challenge and make choices about the charities they support. We do, of course, scrutinise accounts if we have concerns about a charity and we can follow up any issues that people bring to our attention, such as those mentioned in the March editorial.

Making information about charities accessible to the public on our register is vital, and yes, that will expose the bad and the ugly of the sector as well as the good. But this is how open and transparent regulation works, and this increased exposure of information will, we feel, encourage better practice right across the board.  

Rosie Chapman is executive director of policy and effectiveness at the Charity Commission

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