Last week NCVO reviewed Charity Commission governance and found problems with the process of appointing the chair. David Ainsworth asks whether the review process will strengthen the regulator.

Last week NCVO called for changes in the way the Charity Commission chair is appointed, after identifying several flaws in the current process.

NCVO's proposals make sense, but how much does it affect the Commission to have an umbrella body launch a review of this kind - especially since another influential umbrella, Acevo, has simultaneously launched its own review.

Let’s deal with the current appointment system first.

At the moment, this is based purely on ministerial patronage, with a bit of halfhearted scrutiny from the Public Administration Select Committee. Recently the current chair, William Shawcross, was reappointed little more than halfway through his term by Francis Maude, Minister for the Cabinet Office.

It went through on the nod. It was a disgrace, and Sir Stephen Bubb of chief executives body Acevo rightly said so at the time.

There were rumblings over the original appointment of Shawcross, too. He was seen as a staunch Tory man, and senior figures connected to the regulator questioned whether he really fit the job specification. There appears to have been little warmth between him and the chief executive, Sam Younger.

The previous chair, Dame Suzi Leather, hardly endeared herself to everyone either. She was a card-carrying member of the Labour Party, and the Daily Mail went for her with a rare savagery, particularly its columnist Quentin Letts, who dipped his pen in gall on an almost weekly basis.

In short, NCVO is obviously right that change is needed. In recent years, it’s looked like competence is a less important qualification than a willingness to wear the right colour rosette, and that hurts the Commission a lot.

Does this review help the Commission?

Despite all this, though, it’s questionable whether this review and the Acevo investigation really help the regulator.

The Commission’s reputation is currently at a pretty low ebb, after it got a pasting for its handling of the Cup Trust affair in particular and its regulatory stance in general. In 2013 the Public Accounts Committee’s savaged Shawcross and Younger, and the National Audit Office published a scathing report.

Things are turning around now but the Commission still needs a bit of help. NCVO and Acevo may not be totally happy with the Commission, but they do need to give its current executive some support.

Sir Stuart Etherington, chief executive of NCVO, has been at pains to point out that this review is not a criticism of the Commission, but it’s not possible to convey that subtlety in a headline, and a lot of people may not be convinced.

The relationship between sector representatives and its regulator is a delicate balance, because obviously Bubb and Etherington cannot ignore bad decisions by the Commission, particularly if they affect the already charged question of the sector’s independence of voice.

But on the other hand, those who wish to muzzle the sector are all too ready to seize on any evidence that charities need to be regulated more firmly.

Commission funding

The other element in the mix is the funding of the Commission itself. There have been mutterings, within the sector and without, that the Commission’s budget is insufficient for the task it has been set, and that charities should pay for the regulator themselves.

NCVO's governance review is in part a positioning exercise, in case this change comes about.

If it does, it's not necessarily a bad thing. Most industries pay for their own regulator, and it would cost at most 40p for every £1,000 earned in the sector. However the arguments for and against are pretty complex. It’s difficult to justify using donated funds to effectively pay the government for services. But on the other hand, good regulation benefits the whole sector.

My colleague Andrew Hind, editor of Charity Finance and former chief executive of the Commission, is an advocate of the idea, and I think would like NCVO and Acevo to be much more robust proponents.

Of course if the sector did pay for the Commission, that would have implications for governance, and that's part of the point of this review. It asks whether it would be acceptable for charities to fund their regulator if its chair is still appointed through a process of patronage.