William Shawcross, Chair of the Charity Commission, gave a speech at the Rathbones Charity Symposium.
Good afternoon and thank-you for inviting me to take part in your symposium in these very beautiful and fitting surroundings: as I am sure you know, this hall is dedicated to the late philanthropist Paul Hamlyn, one of the most successful - and often controversial - British publishers of the 20th century. The quality he is most remembered for - and the reason this hall is named after him - is his generosity. He supported many charities during his lifetime and when he died in 2001, he left most of his estate to the Paul Hamlyn Foundation. Today, that charity has assets of around £620 million and spends around 20 million pounds on grants to other charities every year.
I’m also delighted that this event is organised by the eminent firm Rathbones. The Rathbone family has produced many a great philanthropist, such as William Rathbone, who in the 19th Century worked with Florence Nightingale to establish the Liverpool Training School and Home for Nurses and helped set up the University of Liverpool.
So this is a good place for us to discuss charity and philanthropy today.
This also feels like a fitting time. Charities - and the Commission as regulator - have rarely been out of the headlines in recent months. We have witnessed impassioned public debates about executive pay in charities, about charity campaigning, about failings in individual charities. Charities, and the Commission as regulator, have been the subject of Parliamentary committee hearings, radio documentaries and newspaper exclusives.
This scrutiny hasn’t always been pleasant. Least of all for the Charity Commission, which I have had the privilege of chairing since last October. But it has underlined just how precious the concept of charity is to the British public.
The charities on our register - of which there are more than 162,000 - are in my view vital to British society. Nearly a million people in England and Wales serve as trustees, and in 2011-12, the British public donated over £9 billion to charities. Nearly half of all charities are tiny, with budgets of less than £10,000. Kitchen table charities one can call them. These are perhaps the most precious of all because they represent the philanthropy of individuals. No other European country can boast of a voluntary sector like ours. We should be proud.
But we must not take this blessing for granted. Public trust and support for charities is not unconditional. People are increasingly demanding about accountability and probity in charities. This is hardly surprising, given the economic environment. When people are feeling the pinch themselves, they rightly want to know the money they give to charity goes to the right place and is used effectively. Charities must respond to these expectations, and so must the Commission. In this context, I would like to explain what we at the Commission are doing to protect and promote public trust in charities.
And it’s quite simple: the Commission must fulfil its primary role as policeman of the charity sector.
Our strategic plan prioritises promoting compliance and accountability in charities. This is sensible. But we can and must improve.
In March, the Public Accounts Committee criticised us for not using our legal powers often enough. These are the powers that allow us, for example, to suspend or remove trustees or compel charities and others to provide information.
I do not agree with all of the criticisms the Committee made. But the Committee is right in one respect: the Commission can and must do more to take action against charities that fail to comply and bring other charities into disrepute as a result.
Since taking over the Commission, I have appointed a brand new board of exceptionally talented people who are determined to improve the Commission’s performance. Among our new board members is Peter Clarke, who is a former Deputy Assistant Commissioner in the Metropolitan Police Service, where he was Head of the Anti-Terrorist Branch and National Co-ordinator of Terrorist Investigations.
Peter Clarke is only one of many new board members who symbolise the fact that the Charity Commission means business. We intend to ensure that charities comply with the letter and the spirit of the law. And that therefore the public can have confidence in donating to charities.
Under the leadership of the new board, we have already begun to make improvements - principally in three areas:
First, we are tightening our approach to serious case work and investigations. In the past, we have too often given trustees too many opportunities to resolve problems themselves, before we took definitive regulatory action.
The new board and I are determined that we will be getting tough with charities that do not comply with the law and are under investigation.
We have also pushed for changes to the law to ensure that people whom we suspect of serious wrong-doing in one charity, cannot go on to act as a trustee in another charity. People who deliberately abuse the good name of charity to commit crimes or enrich themselves are few and far between. But it is our job as regulator to find them, and deal with them.
I would like to repeat that we need a general power of disqualification that allows us to prevent unfit people from acting as trustees for any charity. At the moment, an individual who knows that we are about to remove him or her as a trustee can simply resign and blithely move on to another charity. We can’t do anything to stop them.
And you can be convicted of terrorism offences or money laundering and still be a trustees of a charity. This is ridiculous, to put it mildly.
We need new powers in order to regulate effectively to promote public trust. We have been calling for new powers for some time.
Second, we will be targeting charities that repeatedly default in filing their annual accounts. This is often a warning sign that a charity is going astray. We are exploring with HMRC whether charities that file late should be barred from receiving Gift Aid. We are also exploring charging an admin fee or fine for late filing.
Third, we are stepping up our work to prevent and tackle terrorist abuse of charities. The misuse of charities for terrorist purposes represents a despicable inversion of everything charity stands for and we will fight that without quarter.
And we have put out very clear guidance to charities about extremist and controversial speakers. It is unacceptable for charities to promote the views of individuals who promote violence and terrorism.
In the last decade, student groups in London Universities frequently invited the Islamist propagandist Anwar Al Awlaki to speak in person or by video. It was he whose sermons incited a young British Muslim student to try to murder her MP, Stephen Timms. It was a mercy Mr Timms survived her knife attack.
No one preaching murder should have the protection of freedoms of speech or charitable law.
We are also fully engaged with other parts of government to ensure that our regulatory role really contributes to the UK’s counter terrorism infrastructure. We are contributing to the work of the government’s extremism task force.
Dealing with extremist abuse of charities is not our only priority. But unfortunately today it has to be a very important one.
I believe that the new board is taking the steps necessary to turn the Commission into the kind of regulator the public expects.
But we must be careful. We have a really difficult line to tread.
We are the regulator of charities, the policeman when we have to be. But we must not become the Stasi of the charitable world.
Deliberate abuse in charities is not the norm. For every trustee who commits abuse there are a thousand whose intentions are good. They make mistakes but these are rarely venal. We must not come down like a ton of bricks on those trustees who are just a bit too laid back. Instead we must continue to give the well-intentioned majority the tools they need to keep their charities on the straight and narrow.
We must, for example, continue to produce web based guidance that helps trustees understand what the law expects of them. This is a very important part of our work.
For example, we will soon publish new guidance on managing conflicts of interest in charities. This will be the first time we have provided dedicated advice in this area, and I hope it will help.
Within the next few days, we will be publishing our revised public benefit guidance. Producing this guidance has not been an easy task - the law on public benefit is unbelievably complex. Indeed the Public administration select committee has acknowledged that we were given a very difficult task when Parliament demanded in the 2006 Charity Act that we tell everyone what Public Benefit means. Parliament itself found that impossible. I am not surprised.
The government in its response to that report agreed that it was inevitable that our guidance would be challenged. That has happened over independent schools and now over religion, fraught areas both.
But I hope our guidance helps charities work out what they have to do to provide public benefit and thus qualify for charitable status.
This brings me on to the role charities themselves play in upholding public trust in charities.
As regulator, the Commission can only do so much. Our guidance can explain legal principles, and we can get involved when legal principles have not been followed.
But we cannot go beyond that by telling trustees how to run their charities. We would not want to. Trustees rightly have very considerable discretion to make decisions they think are in their charity’s best interest.
But with that freedom comes responsibility to explain their decisions to the public. Being accountable goes beyond meeting reporting requirements. It means giving an honest answer to the questions the public is asking.
Charity pay is a topical example: If trustees feel it is in their charity’s interest to pay high salaries to attract talented people, then they should have the courage of their conviction and explain their decisions publicly. There is no point in moaning how difficult and vital the job is in the 21st century. They must step up and take responsibility for keeping the public informed and for maintaining public support. No-one else is going to do this on charities’ behalf.
I’m delighted, therefore, about the National Council of Voluntary Organisations’ plan to develop with us an advisory code for trustees on senior staff salaries. This is a great example of a charity-led initiative aimed at providing guidance to charities and information to the public.
I would like to see many more such initiatives that promote high standards of management in charities - standards that go beyond the legal minimum the Commission is able to enforce.
Another topical example is campaigning. I don’t want to enter the debate about the merits of the Lobbying Bill here. But I would like to point out that charities must use their freedom to campaign responsibly.
It is perfectly legal for charities to use their voice and their influence to call for change that will benefit their beneficiaries.
But trustees must oversee their charity’s campaigns to ensure they promote the charity’s objects and do not harm its reputation unnecessarily.
For example, we recently conducted a case involving the RSPCA after receiving a complaint from the National Farmers Union about the charity’s activities in relation to various issues, including the badger cull.
I am glad to say that we got a categorical assurance from that it does not and will not advocate the naming of farms or farmers involved in the badger cull and totally condemns any personal intimidation.
We will continue such engagement with the RSPCA and other charities when necessary.
And, finally, the public themselves must do their bit to promote good management in charities. If there are things that you in this hall do not like about the charities you know, speak up, demand changes.
Each of us can influence which charities grow and which do not by exercising donor choice. Give to those of whom you approve. Give generously!
I would like all donors to take as much care when making such choices as great philanthropists - from William Rathbone to Paul Hamlyn - did.
The Commission’s online register provides information about all registered charities, including about their record in terms of filing accounts.
I would like donors to use that information. By doing so, they can play their part in raising standards of governance in charities.
I would also like to encourage everyone here to consider serving as a charity trustee. I am sure many of you already do. Many charities have vacancies on their board that they are struggling to fill.
Trusteeship is a special form of public service. It exemplifies volunteerism and self-reliance - two of the most important characteristics of our national culture. And trusteeship as an institution helps safeguard the independence and freedom of individual charities.
I would especially encourage young people to consider trusteeship. Young people are sadly underrepresented on charity boards despite having a great deal to offer. Trusteeship is a wonderful way for them to demonstrate responsibility, energy and commitment - to potential employers, and to everyone else.
So, in conclusion - I want to assure you that the Charity Commission, with its new board, is grasping the nettle. We are changing our management and re-allocating resources where necessary, we are concentrating on tackling the real problems that we and our friends and critics have identified. We are determined to help charities and the public whose confidence and support is vital to charities, to have confidence in each other. Charities have been described as a golden thread in British life. We want to make sure that they remain so. Our heritage of philanthropy and voluntary action has produced wonderful organisations such as the Royal Opera House and great philanthropists such as Peter Hamlyn and William Rathbone.
So I would like to end by thanking you for the work you do and by encouraging you to keep it up, to show persistence, in these straitened times.