Upholding public trust and confidence
Charity Commission Chairman William Shawcross speaking at Paris Smith’s Charity Conference.
Good Afternoon and thank you very much for the invitation to come and speak to you. It is heartening to see so many people from charities who are keen to engage in the important issues of the day and want to run their charities even more efficiently.
There are over 450 registered charities in the Southampton area, ranging from scout groups to the Mayflower Theatre Trust. I am continually impressed by the sheer variety of charitable organisations. And so many start life literally around someone’s kitchen table.
It is precisely because our charities are so valued that they need protecting from the minority of individuals that bring charities into disrepute. William Beveridge, who founded the welfare state, described charity as running ‘like a golden thread through the living tapestry of our national story’.
Public trust and confidence in charities
We have already had a reminder from Sarah Wheadon about fraud, and why it’s so important that the Commission deals effectively with these rare cases of abuse. It is damaging to all charities when one case of abuse of any kind surfaces. Good reputations are hard to win but easily lost. In an age when so many institutions have been rocked by scandal, charities cannot take public support for granted.
Public trust in charities is the oxygen that they need to succeed – the public will and desire to give, volunteer and contribute.
Public trust in charities has remained high, but the public is scrutinising charities in far greater detail. For the first time our research shows that how a charity spends its money had become the most important factor in driving public trust. This is now more important to people than whether a charity is making a positive difference to the cause they work for. This is a significant shift. It shows that transparency and accountability in charities is more important to the public than before.
So how can charities help keep public trust high? Firstly by filing their accounts with us on time. As of today 179 charities with incomes over £1 million are late sending us their accounts and annual returns. You can see who they are on our website. This is unacceptable because it stops the public knowing how a charity spends its money. Some of your fellow charities who were subject to a statutory inquiry for defaulting twice on their accounts have yet again defaulted and are going back into inquiry. This cannot continue.
Trustees can increase public trust by not falling foul of charity law. 220,000 trustees now get our quarterly newsletter to keep them abreast of any new guidance or developments. If you don’t already receive it, do sign up for it on our website. It contains important updates about guidance and useful case studies that help you understand how to avoid common problems.
And charities must be ready to answer the public’s questions. People want to know more about charities, and charities need to have clear answers. Where does your money go, how much is spent on fundraising and administration? What are your staff paid? How do I know my donation is going to the end cause?
Register of Charities
Many of these questions are answered on our online Register of Charities on our website. The Register is the shop window into the charity world. You can see who a charity’s trustees are, and access their contact details. Our Register is increasingly well used - charity entries were viewed 6 million times last year. But we want people to use it even more. Whilst giving to charities is often a decision made with the heart, we need people to give with their heads too.
That’s why we are piloting a new tool to search our register. We want people to be informed givers. Please do have a look at the new search tool and give us your feedback as we continue to develop it. We hope it makes information about charities clearer.
Well–run charities deserve an efficient and robust regulator. And that is what I want as the Commission’s Chairman. It is not news that the last couple of years have been difficult for us. We have been rocked by questions about our own performance. But I hope and believe that is behind us. The National Audit Office has scrutinised our work and in January it published an encouraging report. They said we have made good progress. They acknowledge we make better use of our powers and do more investigations.
The figures speak for themselves. In 2013-14 we opened 64 new investigations. The year before we opened only 15. Last year we used our legal powers 790 times, compared to 216 the year before. We are monitoring charities more effectively where there are concerns, and using data better by exchanging information more frequently with other bodies such as HMRC.
I am very pleased that the NAO have acknowledged the effort we have put in. But I know there is much hard work ahead of us to complete the change under my Board’s leadership. We are not complacent.
The Commission’s support for charities
What does concern me is the impression some people have that we are deliberately being ‘less helpful’ to trustees. That certainly is not the case. But it is true that our limited resources prevent us from giving bespoke advice as we used to do. Five years ago we had £40 million a year and now it is £21 million. We have had to concentrate on our compliance work, but I do think the whole sector gains when bad practice is tackled. It is in every charity’s interests that abuse is dealt with, which is why we have placed much emphasis on this. But we do not do that at the expense of our permissions work. Every day we help charities to merge, change their purposes, sell property or land or make other changes to achieve their aims.
For example, at the end of last year we were approached by the trustees of the Band Aid Charitable Trust. You will remember that the original song, “Do they know it’s Christmas”, recorded some 30 years ago, raised millions. The charity trustees thought they would have to establish a new charity in order to raise funds through a new version of the song to fight Ebola, as their charitable objects were restricted to the relief of hunger and poverty in Ethiopia. To save time, money and unnecessary administration for the charity, we made a scheme that added an additional “relief of sickness” object, while ring fencing the original property and any income arising from it for the original Ethiopian objects. This was done in three days.
And we are always looking at where red tape can be safely reduced or actions can be made simpler. I welcome the Law Commission’s report published last week. They make many sensible suggestions that could help reduce red tape for charities, and we shall be looking at them all in more detail. I would encourage you to read it and respond to their consultation.
And we are doing our bit to make running a charity easier. Your accountant can now submit your accounts online to us directly. We are working to make it easier for charitable companies to submit their accounts to us and to Companies House. We are using social media to highlight our guidance. We absolutely want to support the vast majority of well-run charities on the limited resources we have by being smarter about how we use them.
I have also picked up frustrations amongst people trying to contact us by phone, or in finding what they need on our website. We are well aware of this. Of course in an ideal world we would have 24 hour helplines, but this is not possible. Instead we have introduced a call-back system for people to request phone calls back at a time of their choosing. We are also looking at how we can make guidance easier to find on the website. This is already bearing fruit. Our essential trustee guidance now receives over 20,000 views per month on Gov.uk compared to 7,000 on our old website. But we need your help. Please, fill in an online feedback form if you cannot find what you want.
Sadly there will always be a minority of people who wish to abuse charities. Charity fraud is a sad reality. Charity trustees cannot be naïve to the risks that they face, and need to do all they can to protect their charities. We provide guidance on our website to help, and we are encouraging larger charities to make use of a free tool aimed at helping them assess their resilience against fraud. This is, I regret to say, called the Self Assessment Fraud Resilience Tool. Nevertheless! It is effective and it is based on 29 questions for charities to answer. It shows how well you compare with other charities. It is anonymous, and I would encourage you to use it.
Charities face many risk, including risks to their good reputations and consequently that of all charities. We have recently seen this in the case of two charities that had in the past funded CAGE. CAGE itself is not a charity, but describes itself as an advocacy group. Its director recently made quite reprehensible public statements about individuals thought to be linked to unspeakable acts of terror. He did so in a press conference broadcast live by the BBC. You may have seen it yourself. The statements made by CAGE, and the adverse media coverage that followed, raised very serious concerns that charitable funding for the organisation risked undermining public trust in charity.
We had been engaged with the two charities in question, the Joseph Rowntree Charitable Trust and The Roddick Foundation, since December 2013. We scrutinised each charity’s relationship with CAGE during this period, including analysing whether their grants were appropriate and whether the trustees had ensured that those charitable grants were used for exclusively charitable purposes in line with their charity’s objects. There were clear questions for a charity considering funding CAGE’s activities as to how the trustees of such charities could comply with their legal duties.
As a result of our intervention, both charities have given us assurances that they have ceased funding CAGE. We have also reminded all trustees of their duties to undertake due diligence when making grants, especially to non charitable organisations.
Some people have questioned whether it is for the Commission to decide what is in the public interest, or what might damage trust and confidence in charities. Yes it is. We exist to regulate charities on behalf of the giving and volunteering public. As I said earlier, public trust is vital to charities. If this is under threat in any way, we must act.
But I do want to be clear. This case does not mean charities cannot fund projects that are unpopular or controversial. Charities have a proud history of supporting difficult causes, such as helping asylum seekers, rehabilitating offenders or promoting little-known causes. But we expect trustees to manage the risks attached to such work. We will be updating our guidance for trustees in due course.
Charities are never far from the headlines, which is why the Commission has such an important role. Take the Plymouth Brethren Christian Church, or the Exclusive Brethren as they are sometimes called. The Times newspaper has in the last week raised questions about the nature of the Church’s practices, its schools and its tax affairs. The Times has also implied that the Commission was leant on by politicians to register the Preston Down Trust, a Plymouth Brethren meeting hall. They did indeed have a lot of parliamentary support. But the group had to go through a robust process for almost a year and make changes to their government document and behaviour before we would agree to register them. It resulted in the Preston Down Trust acknowledging for the first time past mistakes and agreeing to revise its governing document by entering into a Deed of Variation.
This required the trustees to set out in detail their core religious doctrines and practices in the context of Christian compassion. The Commission’s decision was published in detail.
Anyone with concerns about the Brethren could have appealed our decision to the Tribunal. In fact, the Commission’s approach was welcomed on both sides, including by Baroness Berridge, who had taken up the cause of critics of the Brethren.
A year on from registering the hall we are currently conducting a review into it which we will publish. If we find anything that brings the good name of charity into disrepute, we will of course act.
These cases demonstrate the enormous variety of charities, yet regardless of what charities do or how big they are, we regulate them all. We have to speak to them about a wide range of topics. So the way we speak to charities and their trustees will vary according to the message we are trying to give. Some have suggested this raises questions about the consistency of the Commission’s voice. I disagree. It is still the same Commission. I understand that we must keep listening to charities. But we balance that against our role as regulator of charities on behalf of the giving public. None of us can lose sight of their central role on this.