Policy paper

How the Charity Commission investigates charities

Published 23 May 2013

Applies to England and Wales

• Publication for Northern Ireland
• Publication for Scotland

1. How we assess concerns

We identify and assess concerns about charities from a wide range of sources. This includes complaints that are brought to us, and also regulatory issues that we have identified as a result of our own proactive work.

We assess these concerns against our Regulatory and Risk Framework to decide:

• whether it is a matter for the Commission
• the seriousness of the issue, the extent of the risk involved, and how the trustees are dealing with it

2. Where we take regulatory action

Our regulatory role focuses on the conduct of trustees and their governance and leadership of the charity. If something goes wrong, trustees must take responsibility for putting this right. As regulator we ensure that trustees are actively and effectively doing this. Where trustees are unable or unwilling to do so, we can deal with the concerns in a regulatory compliance case. These cases are not formal investigations, rather they aim to ensure that trustees address any failures and weaknesses in their charities’ management. This may be by following our guidance or an action plan that we have agreed with them. When necessary, we can resolve charity governance issues by using our legal powers to make schemes or orders where a charity does not have its own powers to do so.

Occasionally, in cases of abuse, or where we have suspicions or evidence of mismanagement and/ or misconduct in the administration of a charity, we can open a statutory inquiry to identify and investigate this and to resolve the problems that are found.

3. Where we open a statutory inquiry

A statutory inquiry is a legal power that allows the Commission to formally investigate regulatory concerns within a charity, charities, or class of charities. Generally, we open an inquiry where we have regulatory concerns that there is, has been, or that there is the potential for misconduct and/ or mismanagement in the administration of a charity.

The aim of an inquiry is to:

• identify the extent, if any, of misconduct and/ or mismanagement in the administration of the charity
• assess any risk to the charity, its beneficiaries, employees, volunteers, or assets
• decide whether we need to protect the charity

An inquiry is a fact-finding exercise, to examine the issues, and is not in itself a predetermination of wrongdoing. The exception to this is where it is clear at the point of opening that there has been wrongdoing and that we may therefore need to consider immediately using our temporary protective, or permanent remedial powers.

Before opening a statutory inquiry, we may carry out a pre-investigation assessment. This will include an examination the allegations and causes for concern against our Regulatory and Risk Framework. The purpose of such an assessment is to make sure that we apply our criteria to open an inquiry consistently and fairly. This assessment examines the causes for concern and whether the triggers for an inquiry are met.

The criteria for opening an inquiry are based on one or more of the following factors:

• indications of misconduct and/ or mismanagement in the administration of the charity
• a significant breach of trust or non-compliance with charity law
• a significant risk to charity property, beneficiaries, employees, volunteers, or work
• we may need to use regulatory powers which are available only if an inquiry has been opened
• we need to establish or verify facts, or collect evidence, and an inquiry is the most effective way of doing so
• we need to safeguard public trust and confidence in the charity or in charities generally

Each case is assessed on its own facts and may be affected by the capacity, conduct, and response of the trustees.

After we have opened an inquiry, we can use the full range of our powers to obtain information and to protect the charity, its beneficiaries, assets, or reputation. Some of these powers are temporary, such as restricting transactions or ‘freezing’ a bank account. Others are permanent and carry on after the end of an inquiry, for example, appointing or removing trustees.

For further information about how we conduct our inquiries read the guidance Statutory inquiries into charities: guidance for charities (CC46).

We also publish the findings of our inquiries and other casework.