The Charity Commission is planning to scrutinise charities with pension deficits as it increases its accounts monitoring and review work for the year 2013/14,and takes a “tougher stance” on non-compliance issues.
In its annual report on investigations and compliance case work, Tackling abuse and mismanagement, the Commission reveals that: “We have both increased the number of accounts we are reviewing (to over 6 per cent of the Register and over 88 per cent of charities’ total income) and focusing the themes of the review more closely on areas of regulatory risk.”
As well as looking at pensions deficits – as an example of potential risk – it will also look at charities that report high governance costs.
At the end of a difficult year for the regulator, when it was repeatedly criticised by MPs for not making full use of its powers, the report says it has “toughened its approach” and increased its use of regulatory powers, opening 1,513 operational compliance cases and using its statutory powers 216 times.
The vast majority of its work was concerned with fraud, financial abuse and mismanagement, with 23 of the 29 most serious investigations in this area.
Sam Younger, chief executive of the Commission, said: “By taking a tougher approach to non-compliance in charities and using our powers more frequently in cases which are the most serious, we can protect charity funds at risk and ensure we are better able to identify and deal with individuals who negligently or deliberately abuse charities, making them accountable to the regulator and in turn the public for their wrongdoing.”
The report confirms that the Commission has signed a new memorandum of understanding with HMRC to be “more specific” about the information shared. It also notes that through the formal statutory Gateway the Commission shared information with other statutory agencies, including HMRC, 1,539 times last year.
Cup Trust follow-up
The Commission is looking into ten charities as a result of action taken following the Cup Trust scandal earlier this year.
It looked at other charities with similar characteristics - low expenditure as a proportion of income - and reviewed the accounts of 190 charities, identified 17 to look at more closely and opened 13 cases. Three if these cases have now been closed.
Counter-terrorism strategy
In 2012/13 concerns about abuse of charities for terrorist purposes featured in one report of a serious incident, one whistleblowing report, 29 completed pre-investigation assessment cases, 37 monitoring cases, and four statutory inquiry cases - two of which were new cases opened during the year.
In January 2013 the Commission ran a series of counter-terrorism events at universities which it says had a positive impact with 78 per cent of those who attended describing themselves as well prepared to apply charity law in the context of extremism after the event.
However, this week, Professor Clive Walker of the University of Leeds told the Home Affairs Committee that the Commission has failed in this strategy, and in its wider work on counter-terrorism.
