The Chair of the Charity Commission, William Shawcross, gave a speech to the Churches' Legislation Advisory Service.
Good afternoon. I am delighted to be here with you at long last. The invitation to take part in one of your events arrived in my inbox last summer - I am sorry it has taken so long for us to find a date that suits us all.
I would like to start by saying how important I think the work of organisations such as CLAS is in supporting and representing charities. Most of the charities on our register, including many religious charities, are small, volunteer run organisations. Individually, they may not always be able to make their voices heard. But when charities come together to speak on issues of mutual interest or concern, they can have a powerful influence. Umbrella groups such as the CLAS also fulfil an important role in providing advice to their members. This aspect of your work will, I expect, become ever more important in the months and years ahead, not least because of changes at the Charity Commission, as I will explain.
As you may know, the Commission has been undergoing profound change since I took office in October 2012. I have appointed a brand new board and we will soon appoint a new chief executive, who will start later this year. He or she has a challenging brief: to lead the organisation through this period of change that will, I am confident, result in a Commission that is better able to fulfil its core purpose - to promote trust in charities by regulating them effectively. This will mean concentrating on our fundamental functions - registering charities, investigating concerns about charities and providing generic guidance that helps trustees understand their duties.
At the moment, the new board is focusing in particular on improving our approach to tackling the most serious cases of non-compliance in charities. As you may be aware, the National Audit Office recently criticised the Commission’s approach to investigations. We don’t accept all of the NAO’s findings, but we have accepted many of their recommendations. Indeed, we had already started making changes before the report was published.
For example, we had already increased the number of statutory inquiries, our most serious type of investigation into charities. Since April of last year, we have opened inquiries into 48 charities; that compares to 15 opened during the whole of 2012-13. We are also using our legal powers more often. We now routinely direct trustees to provide information during a statutory inquiry. In the past, we tended to ask them politely first, only using our powers if trustees repeatedly failed to comply with our request. So far this financial year, we have used our legal enforcement powers over 650 times in statutory inquiries and operational compliance cases. The figure for the previous financial year was 216.
We are also scrutinising and reviewing many more sets of accounts. This helps us identify abuse in charities and encourages charities to improve the quality of their reporting. Last year, we scrutinised 5% of charity accounts; so far this year, we’ve scrutinised nearly 20%. I think these figures give you a sense of the Commission’s changed approach. They illustrate that we are no longer willing to give trustees the benefit of the doubt as we might have been in the past.
But there is a lot more work to do. For example, we must get better at using the data we have on charities to analyse risk and pre-empt serious problems. We are also hopeful that our legal powers will be strengthened and extended. As you know, the Cabinet Office recently consulted on proposals to improve our powers. One sensible suggestion is to strengthen the law around who can and cannot serve as a trustee. At the moment the Commission cannot disqualify an individual from serving on the board of any charity. We can only remove people from specific trustee positions, after which they become disqualified. But if an unsuitable trustee resigns before we can use our powers to remove them, there is nothing we can do to stop them serving as a trustee of another charity. This is not right, in my view, indeed I think it is ludicrous. So I very much hope that the Commission will be granted the new powers we have asked for.
The CLAS took part in the consultation, for which I am grateful. I agree with many of the points you made, including, despite what I just said, that that there should not be a blanket ban on trusteeship by anyone who has ever committed an offence. There will be circumstances in which charities will wish to have on their board people who have been convicted of a crime in their past. Many charities working for the rehabilitation of offenders include people with a criminal past on their trustee board. Our aim in asking for the new powers is not to set the bar for trusteeship so high that no one with a past can serve on boards. Our aim is merely to close loopholes that weaken our ability to regulate when there is evidence of serious wrong-doing. I am glad to note that the CLAS response expressed sympathy for this aim.
Of course, the stronger our powers, the more important it will be that we use them wisely and effectively and I can assure you that I will be vigilant in ensuring we do precisely that. We will not abuse our powers. I have said before and I will say it again - I want the Commission to be the policeman of charities. But I don’t want it to become the Stasi of charities. I repeat, we must use our powers carefully.
Of course, preventing and tackling abuse is just one, albeit very important aspect of our work as a regulator. Together with the board, the new chief executive will have to look at the full range of the Commission’s functions to ensure that we use our funds as effectively and efficiently as possible. Because our resources are certainly tight. By 2015, our budget will have declined by 48% in real terms since 2007. Sadly, I cannot guarantee that they won’t decrease further still, though I will continue to argue with Government that continual salami slicing will eventually destroy the Commission.
This means that we will face some pretty tough decisions in coming months. Allocating a greater proportion of our resources to investigating the most serious abuse means that fewer resources will be available elsewhere in the Commission.
I don’t want to pre-empt the work of the new chief executive. But I will say that I think it is highly likely we will have to reduce yet further the amount of one-to-one advice that we give to individual charities. This in turn will make it even more important that our generic guidance is excellent and easy to use. In reviewing the Commission’s work, the National Audit Office completely ignored the purpose and impact of our generic guidance. They seemed to consider it outside of the core functions of a regulator. I hope you agree that this is nonsense. It may not be the Commission’s role to ‘hand-hold’ trustees through their decision making process. But, as regulator, we have a statutory duty to promote compliance with charity law. That means providing the rule book against which charities are measured. We must set out what the law expects of trustees, especially if we are going to hold them ever more stringently to account against those rules.
This is especially important because we know that deliberate abuse and wrong doing are relatively rare. Many of the problems that arise in charities and that occupy our time as regulator result from ignorance, incompetence, or negligence. Our online guidance therefore plays an important role in preventing non-compliance from arising in the first place.
So I expect that the Commission will continue to improve our online guidance to charities and continue to develop innovative ways of sharing that guidance with trustees.
As I mentioned a few moments ago, these changes at the Commission will present new challenges for umbrella bodies and networks such as the CLAS and its members. Charities that might, in the past, have come to the Commission for specific advice on a tricky issue around the application of charity law may, in future, have to seek that help elsewhere. My concern here is especially for the smaller charities that are less able to pay for expert legal advice. These organisations, which include many small religious groups, will rely increasingly heavily on their membership bodies. I hope the ‘infrastructure’ of the charity world is able to adapt to these changes and will be able to cater for increased demand on their services. I hope this shift will also encourage charities to think more strategically about the skills they need on their board of trustees. Having experienced experts in particular areas on board and on tap will save charities a great deal of money and time.
I would like to turn now to subjects which I know are of particular interest or concern to some of your members. First, I would like to say a few words about our recent decision to register the Preston Down Trust, a meeting hall of the Plymouth Brethren Christian Church.
As you may be aware, the Commission had turned down the organisation’s application for charity registration in 2012, before I became Chairman. At that time, the Commission felt unable to determine that the doctrines and practices of the Church as practiced by the meeting hall met the public benefit requirement. The trust appealed that decision. And as you know, the decision caused considerable concern more widely among faith groups and among some members of Parliament. The Commission was accused of pursuing an ‘anti-Christian’ agenda. Indeed during one particularly heated private meeting, one member of Parliament accused the Commission of being ‘worse than the Nazis’ in our supposed persecution of Christians.
In a more measured contribution, one prominent Church of England bishop told me he was worried the decision had opened a Pandora’s box for Christian and Jewish organisations. Some felt that in denying the Preston Down Trust registration, the Commission was paving the way for further incursions on the freedoms and privileges enjoyed by faith charities. I do understand why some people were unsettled by the 2012 decision. Indeed, I was unsettled by it myself.
So I would like to reassure you that the Commission is not anti-Christian, or pursing any agenda to question the furthering of religion as a charitable purpose. We are not part of the alleged secularisation of Britain. I know full well that the history of charity is inextricably linked with the history of Christianity in this country. To undermine the link between religion and charity would amount to cultural vandalism of the most pernicious sort. It will not happen under my watch at the Commission - I can assure you of that.
Let me explain the reasons for the 2012 decision and set out why the Preston Down Trust has since been able to satisfy us that it meets the requirements of charity law. The Commission never questioned that the Plymouth Brethren Christian Church is a religion or a valid Christian denomination for that matter. The issue revolved around public benefit. The Plymouth Brethren Christian Church practices the doctrine of ‘separation from evil’; this doctrine limits members’ contact with the public and creates both a moral and physical separation from the wider community.
As you know, public benefit is a crucial facet of charity law; the law says that a charity is an organisation with exclusively charitable purposes for the public benefit. An organisation that is not able to demonstrate public benefit cannot therefore qualify as a charity. Some strictly closed religious orders are examples of organisations with objects to promote faith, but whose contact with the public is too limited to allow for charitable status. The 2006 Act brought public benefit into sharper focus. But the principle is not new - a court ruling in 1949 determined that an enclosed order of Carmelite nuns was not charitable because its members had no contact with the wider community. Other communities of Christians have been deemed charitable precisely because they do practice outreach work. An example is the Society of the Precious Blood, which the Commission accepted as charitable, because its members directly engaged with members of the public.
So the Commission’s decision in 2012 had nothing to do with wider concerns about the public benefit provided by Christian denominations. It was a decision based only on a judgment of the public benefit provided by the Preston Down Trust.
We were able to register the Trust earlier this year, because it demonstrated that it was changing and evolving in a way that means members are part of the wider community. In addition, more Christian compassion is to be shown in its internal disciplinary processes and in its relationship with former members who have left the brethren. The charity agreed to adopt a new governing document, which sets out the church’s doctrines and practices in a way that is binding on the trustees. We have accepted that the new governing document describes a charity so we have registered it. The Plymouth Brethren Christian Church has its detractors as well as supporters and champions. Many contacted us following the original decision to describe ways in which they said they had been harmed by the church. Some were former members of the Church who were now barred from contact with their close family members who remained part of their church.
Happily, many of those who raised concerns have welcomed our decision to register the charity under its new governing document. Because registration means that we can regulate the charity against its trust and hold its trustees to account. We have already made clear that we will be monitoring the charity, as is our normal practice with complex registration cases, to make sure it is operating in line with its trusts and charity law.
I am very proud of this outcome. I am especially pleased that it was settled outside of the Tribunal at the request of the Preston Down Trust. I hope this result reassures other religious organisations about the application of charity law, and allays any concerns you or your members might have had about the Commission’s stance on religion and charity.
I’d also like to touch briefly on the issue of excepted charities, again because I think this is of interest to many of your members. As you will know, many Christian churches have been until now excepted from registration with the Commission. This means that while they are charities and are regulated by us, they are not required to be registered or submit annual information to us. The 2006 Act changed that. Charities that were previously excepted will in future need to register. Parliament has decided that, as a matter of principle, common standards of regulation should apply to all charities, and some potentially confusing historical anomalies should be phased out.
I know there continues to be some concern about this, notably within the Church of England. Others are worried about the fact that they are not able to register as charities until the exception runs out in 2021. Many recognise the benefits of registration and would like to join the register sooner on a voluntary basis. I would like, again, to reassure you on this matter. The end of the exception has been extended to 2021. But we do not expect every single member of every single currently excepted denomination to be registered immediately in 2021. Nor will we keep the doors of registration closed to excepted registrations until that year. Instead, we will take a reasonable, flexible approach. As part of our planning for 2021, we are likely to adopt a programme of voluntary registration. And we will not pursue currently excepted denominations whose members do not apply to register as soon as the exception expires.
The reason we are not able to start immediately with a programme of voluntary registration is, quite simply, that we do not currently have the resources to process what we expect will be many thousands of applications from previously excepted charities. But we will do what we can, and will communicate with the CLAS and your members as our plans take shape.
The Commission is required to implement this legislation; the end of the exception was not our idea. But I hope that, in the long term, it will prove a positive development for Christian Churches, and all other charities that are currently excepted and that will come onto the register after 2021. I think trust and confidence in your members can only increase as a result of the accountability and transparency that follows from being a registered charity. I certainly don’t think any trustee or member of any Christian church should fear the requirements of charity law. As I have said - the strength and vibrancy of the charity world today owes a great, great deal to our Christian inheritance and to continued Christian observance.
I have no doubt that the Church, and other faith organisations, will continue to play their vital role in developing and shaping charity in this country. You need look only at the work the church has done to help develop the network of food banks that, sadly, so many people today rely on. The rise of the Street Pastor movement is another example of the way in which the gospel continues to inspire people to get involved and make a difference in their communities. There are many other examples of wonderful work inspired by Christians and led by Christian churches.
For my part, I will do what I can to ensure the Commission fulfils its core purpose so that the public continues to place its trust in charities such as yours.