Charity Commission chair William Shawcross said last night that the regulator intends to send clearer deterrence messages to those abusing charitable status, and take more decisive action when things go wrong.
He predicted that the National Audit Office (NAO) review of the Commission – expected to be published later this month - was likely to conclude that it had been “over-cautious in responding where charities have engaged in financial mismanagement”.
Shawcross said that greater use of the regulator’s powers to compel trustees to respond, more publicity when statutory inquiries are opened, and better reports about the outcomes of those inquiries would be key elements in the Commission’s response to the NAO’s findings.
However, he repeated the assurance he has previously given that he “doesn’t ever want the organisation to become a paranoid Stasi-like regulator”, noting that the majority of the sector comprises “tiny, kitchen-table” charities which are doing good work for their beneficiaries.
Shawcross’ remarks came in a lecture to an audience of 300 on the regulator’s role in helping to stimulate philanthropy, at London’s Mansion House. The event marked the beginning of a year-long charity leadership programme initiated by the new Lord Mayor of London, Alderman Fiona Woolf, who took office last weekend. The programme is being supported by Cass Business School.
Improving probity
Shawcross said that the regulator’s main contribution to encouraging greater levels of philanthropy would lie in building the foundations for improved probity and better governance in the sector, thus driving public confidence in charities to an even higher level. Becoming more proficient in its compliance role was an essential prerequisite if the Commission was to achieve this goal, he believed.
But Shawcross placed the Commission’s compliance role in a broader context. In a world where the boundaries between sectors are blurring, he believed it was important to protect what makes charity distinctive.
As well as enhancing probity, Shawcross highlighted what he sees as being the three other main “pillars of charity”:
• Maintaining independence from funders, the personal interests of trustees or staff, and political interests;
• Contributing public benefit; and
• Ensuring that the voluntary principle remains at the heart of charity.
In a largely uncontroversial lecture, Shawcross left some questions hanging in the air about how he thought the Commission should use its online Register of Charities to “energetically patrol those boundaries” in the future.
He said protecting voluntarism was the reason why the Commission has recently announced that it will mark charities on the Register where trustees are paid. Perhaps foreshadowing more action of this nature, Shawcross indicated that this practice could go further.
Noting that the proportion of the sector’s income derived from statutory sources had increased to 38 per cent, from 10 per cent in 1980, Shawcross indicated that the Commission might consider noting on the Register where a charity’s principal sources of income came from, and even separately categorising charities funded from donations and those funded by government grants and contracts. If this helped prospective donors decide which charity they want to support, it might be worth doing, he suggested.
