Today the House of Lords Select Committee on Charities published the conclusion of its investigation into issues affecting the charity sector. The report is a whopping 156 pages and contains a round 100 conclusions and recommendations. We’ve pulled out the bits that you really need to know about.
Charities are important
The report explains at length that charities are vital and will continue to be in the future.
It says: “Charities play a fundamental role in our civil live. They are often in the front line of support for the most vulnerable and are therefore in the best place to assess their needs."
Charities need to improve their governance
The report identifies that charity boards lack key skills and are not very diverse and suggests ways to access these.
- All charities should carry out a regular skills audits (for large charities this should be every year)
- Trustees should have access to training - peers suggest a central place to share information about different courses
- All trustees should have induction training (the report suggests that there should be a template for this that small charities could follow)
- Government should launch a public consultation on introducing a statutory duty to allow employees time off work to attend board meetings
- Time limits for trusteeships - although there could be exemptions for family foundations, but charities should explain why. The Charity Commission should produce guidance on this.
- Trusteeship should continue to be primarily voluntary
Charities need to be more transparent
While the report does not recommend any further regulation it does suggest that charities need to be more open and expect more scrutiny.
The report says: “In order to respond to the greater expectations upon them, charities need to operate with a presumption of openness.”
- All charities, except the very smallest, should have a website or social media page
- Governance Code Steering Group sets out best practice for governance reporting eg including a statement in annual report
- All charities should seek independent evaluation of their work
- Office for Civil Society should produce guidance for the public sector about setting up contractual impact reporting requirements
- Charities should produce information that enables stakeholders to assess a charity’s success
Commissioning is in urgent need of reform
Peers have come to the conclusion that “the commissioning landscape is skewed against smaller charities”.
- Government provide support for voluntary sector bidding consortia and push for more commissioning based on social value, rather than cost
- Local authorities and other public service commissioners should adopt a “partnership” approach
- More should be done to embed the Social Value Act
- Government should make sure that payment-by-results contracts consider sustainability for organisations
- Reasonable core costs should be included in contracts
- Commissioners shouldn’t be too detailed in requirements for how services are delivered
‘A revitalised role for grants’
Having concluded that contracts are not always working well for charities, peers suggest that maybe grants could be a solution.
The committee says that even though local authorities are facing challenging times they should try to “maintain or revive grants wherever possible”.
The committee notes that the infrastructure bodies have an important role in providing support and advice. It recommends that they do more of this and work together better.
In the report it says: “They should explore collaborative service models to raise awareness among charities of the support available, and improve the accessibility and coherence of this support.”
Bodies should work together on low-cost training opportunities to improve technology skills. The committee suggests that the Big Lottery Fund pay supports this.
Government, funders and charities can do more to encourage volunteering, according to the report.
Funders should “be more receptive to requests for resources for volunteer managers”.
OCS should work with other departments and businesses to encourage more freedom for people to take time off work to volunteer.
Too many charities?
The committee addressed the idea of whether there is too much overlap in work carried out during evidence sessions. It has found that the Charity Commission does not have the resource to direct people wishing to establish new charities to existing ones to make sure that there really is a need.
But it has suggested the Commission provide more advice to those looking to merge and do more to promote ‘time-limited’ structures. The committee suggests this could be done with a new model document.
Disproportionate focus on social impact bonds
Peers say that the government focus on social impact bonds as a source of new finance has been “disproportionate”
They recommend that in future the government’s funding should be directed to products “with applications to a wider range of charities”.
The committee urges the government to communicate better with the charity sector and recognise its role in advocacy and policy formation.
It suggests that charities should “be better informed about legal changes which might affect them and have a greater opportunity to provide input”.
The report also suggests that the OCS should assess the impact of leaving the EU on the charity sector and publish results by the end of the year.
Current estimates suggest it would cost the sector £200m.
The Charity Commission
The report notes the progress the regulator has made in improving its regulatory functions but expresses concern about the Commission’s plan to charge charities.
It recommends the Commission set out in detail how income from charging charities would be used.