The Chairman of the Charity Commission, William Shawcross and one of its directors today gave evidence to the Public Administration and Constitutional Affairs Committee (PACAC) about fundraising practices in the sector and the commission’s handling of concerns about the former charity Kids Company.
The PACAC session was focused on the self-regulation of charity fundraising, but Mr Shawcross and the commission’s Director of Investigations, Monitoring and Enforcement, Ms Russell, were also asked about the regulator’s engagement with Kids Company.
Mr Shawcross explained that, prior to July 2015, the commission had over recent years received only one substantive complaint about the charity. Concerns were raised with the commission in October 2014 by a donor about Kids Company’s use of their donation, which it assessed carefully, took up with the charity but determined that there were no grounds for regulatory action or further intervention by the commission.
The commission also told the committee that in July 2015 it acted within 24 hours, after specific allegations of financial mismanagement were raised with it for the first time by 3 former employees (see a previous public statement made by the commission).
As a result, the regulator insisted on a number of steps being taken by the trustees; this work was ongoing when the charity closed on 5 August. On 20 August, the commission opened a formal statutory inquiry to continue to investigate and put on the public record whether concerns about the administration, governance and financial management of the charity were true in light of the then increasing number of allegations in the media made about the charity’s governance and financial management, and to identify wider lessons for other charities and trustees.
This is in line with the commission’s duty to promote public trust and confidence in charities. The commission says it cannot comment further while the investigation is underway, but will publish a report once it has concluded, to set out its findings and conclusions. Reports of previous commission inquiries are available on GOV.UK.
On the issue of charity fundraising, Mr Shawcross explained its limited role as fundraising activity is self-regulated, and that the recent review by Sir Stuart Etherington recommended that self-regulation should continue, but with some reforms.
Mr Shawcross made clear that the commission does not have the funding or capacity to take on statutory regulation of fundraising. Mr Shawcross stressed that the commission’s relationship with the new regulatory body will need to be clearly defined in order that the public and charities are clear about the respective roles of the new regulatory body and the commission and other regulatory bodies.
The commission is currently reviewing its guidance Charities and fundraising (CC20) to ensure trustees are clear about what the law and the commission as regulator expects of them, which it will consult publicly on in due course.
Notes to editors
The Charity Commission is the independent registrar and regulator of charities in England and Wales, acting in the public’s interest, to ensure that:
- charities know what they have to do
- the public know what charities do
- charities are held to account
- The opening a statutory inquiry is not in itself a finding of wrongdoing. The purpose of an inquiry is to examine issues in detail and investigate and establish the facts so that the regulator can ascertain whether or not there has been misconduct or mismanagement; establish the extent of the risk to the charity’s property, beneficiaries or work; decide what action needs to be taken to resolve the serious concerns, if necessary using its investigative, protective and remedial powers to do so.