Giving the public confidence in charities

The Charity Commissions Strategic Plan 2015-18

A strong charitable sector is a vital part of civil society. The role of the Charity
Commission is crucial in upholding public trust and confidence in the charity
sector. To fulfil this role to the standard that Parliament and the public expects,
the commission must become a risk-based regulator focussed primarily on
enforcement and prevention.

Demands on the commission are constantly growing and expectations of the commission are changing.
The commission has responded. We have shifted resources into monitoring and investigations, increasing the number of statutory inquiries and the use of our most serious enforcement powers; we have improved collaboration with other government agencies; we have requested new powers, which were included in the
government’s Protection of Charities Bill, introduced in Parliament in May 2015, and we have considerably strengthened our counter terrorism work.
Our strategic plan for 2015-18 (the ‘Strategic Plan’) is framed by this context and determined by our statutory objectives and regulatory approach.

Charities Commission

Our statutory objectives
Our five statutory objectives, set out in the Charities Act 2011, are:
1. The public confidence objective: to increase public trust and confidence in charities.
2. The public benefit objective: to promote awareness and understanding of the operation
of the public benefit requirement.
3. The compliance objective: to promote compliance by charity trustees with their legal
obligations in exercising control and management of the administration of charities.
4. The charitable resources objective: to promote the effective use of charitable resources.
5. The accountability objective: to enhance the accountability of charities to donors,
beneficiaries and the public.

We can no longer devote the same level of resource to each of these statutory objectives as we previously could. This means changing the way we operate, allocating resources by relative priority and risk and working with our partners.
Our regulatory approach
Our regulatory approach is set out in the board’s statement of mission, regulatory approach and values, published in 2014.
We consider that we can best fulfil our statutory objectives with the resources at our disposal by:
• concentrating on promoting compliance by charity trustees with their legal obligations
• enhancing the rigour with which we hold charities accountable
• upholding the definition of charity under charity law and providing charity trustees with clear guidance about their legal obligations

We are confident that the commission can thus promote public trust and confidence in charities, and thereby encourage charitable giving and endeavour in all its forms.
This Strategic Plan sets out our strategic priorities for the next three years
Our strategic priorities
1. Protecting charities from abuse or mismanagement
Trust in charities is high, but abuse of any kind in just one charity damages the reputation of the whole sector, whether the abuse is deliberate or arises through mismanagement.
Since 2013, we have strengthened our approach to tackling abuse and mismanagement in charities. This continues to be a strategic priority and where we will direct most of our resource for regulatory engagement with charities.
We will do this principally by:
• regulating against an updated risk framework informed by better data, enabling us to
focus resources on the highest risk cases and those where we will have the most impact
on public confidence
• improving the speed and effectiveness with which we investigate wrongdoing, applying
our regulatory powers robustly and transparently
• taking more proactive action against the abuse of charities, in a way that is intelligence-led and based on a better understanding of the evolving threats and risks of abuse in the sector
• engaging effectively with other regulators and government agencies, particularly through
better data sharing in order to identify fraud and links between charities and criminal,
including terrorist or extremist, activities
• preventing problems arising through more and better targeted guidance and outreach work
2. Enabling trustees to run their charities effectively
There are around one million charity trustees, most of whom are unpaid volunteers, sometimes with limited knowledge of what being a trustee entails.
It is an essential part of our regulatory role, and a strategic priority, to enable trustees to run their charities effectively, in order to maximise the effective use of charitable resources.
Our financial circumstances mean that we can no longer give one to one bespoke advice to the extent we were once able. However, we will continue to support trustees, by giving them the information and tools they need, and use new ways to do that.
We will do this principally by:
• making it easier and more efficient for trustees to work with us, when they need permissions or other assistance, through better, more user-friendly digital services
• providing clear, accessible, focussed regulatory guidance to make it clear to trustees what they must do to comply with legal and regulatory norms
• using our powers, where necessary and appropriate, to give permissions to charities to help promote the effective use of their resources
• maximising our collaboration with third parties, such as charity funders, professional advisers
and umbrella bodies to help improve trustee effectiveness
3. Encouraging greater transparency and accountability by charities
Charities must never take public support for granted. We know that transparency and accountability is vital to public trust and confidence. Our register of charities provides assurance that a charity is genuinely set up for a charitable purpose and information about charities that often informs funding decisions.
Making legally correct decisions which protect the integrity of the register, and providing the public with up to date, accurate information about charities continues to be a strategic priority.
We will do this principally by:
• introducing an improved registration application process
• using shared data to satisfy ourselves of the legal eligibility of people to act as trustees
of charities
• following up on assurances made through more post registration monitoring and scrutiny
• being quicker to remove from the register those charities that cease to exist, become
insolvent, or which we decide are no longer, or never were, charities
4. Operating as an efficient, expert regulator with sustainable funding
Well-run charities deserve an efficient, robust regulator, recognised for its expertise and judgement and supported by a sustainable funding model.
Our new strategic priority is to deliver the benefits from our transformation programme1
and to reduce our dependence on taxpayer funding.
We will do this principally by:
• consulting on proposals for alternative funding options, including an annual charge for
registered charities
• investing the additional funding given to us by the Treasury in 2014 in redesigning our
operating model and business processes to reduce complexity and achieve higher efficiency and in new digital applications, making it easier for trustees and others to deal with us
Our strategy assures charities and the public that we will be robust in our approach to abuse and mismanagement. We believe that in so doing we will increase public trust and confidence in the administration of charities by their trustees.
Our strategy will also ensure the sustainability of the commission as a robust, proactive, proportionate, risk based regulator.

How will the new Charities Act affect your Charity?

The Cabinet Office published a timetable today that explains when the different sections of the new Charities Act are going to take effect. Largely these are broken down into three separate phases – July 2016, October 2016 and April 2017. A helpful set of explanatory notes on what each of the different clauses means will also be published on next week.

Many of the Act’s provisions help to address gaps in the Charity Commission’s protective powers and will only affect a relatively small number of charities and individuals.

However, it also makes a few significant changes – most notably on disqualification – of which all charities will need to be aware. The timetable gives trustees sufficient time to take any action that is needed.

Charities Commission

We’ll be issuing further updates and information about the provisions in the coming weeks and months – look out for the next edition of Charity Commission News and updates on Twitter and on our website. However, we wanted to use this opportunity to set out now what the main changes cover and how we’re planning to help you prepare for their introduction in the coming months:

1. Consultations on how we use our new powers to disqualify and administer official warnings

On Monday we’re going to be consulting about how we use our power to disqualify individuals from being trustees and holding senior management functions. We will seek views on an updated version of last year’s policy document  which set out how we plan to use the power and the factors that will affect the length of the disqualification. The consultation will last three months.

We’ll also be consulting on how we’ll use our official warning power that will be available to us from October. That consultation is likely to start in late June and will be publicised widely.

2. Power to make social investments

We’re going to be updating our investment guidance in time for the introduction in July of this power which allows trustees to invest their charity’s money to get a financial return (even if it’s below a commercial rate) and, at the same time, further its charitable purposes

3. Other protective powers

In July, a number of protective powers will come into force including the power to direct a charity to wind up and the power to direct charities to not take a particular action. Some of these powers can only be used when we have opened a statutory inquiry. As such, most charities and trustees will not be affected but these powers will improve the Charity Commission’s ability to resolve cases with a better regulatory outcome when we do use them.

4. Fundraising agreements – new terms, new accounting requirements

October will see the introduction of changes to fundraising agreements, following last year’s concerns about charities’ fundraising activities. They will require, in addition to existing requirements already in force, agreements with commercial fundraisers to be clear about certain standards, how they protect the public (including vulnerable members of the public) and how the charity monitors their compliance. They will also require auditable charities to include statements about these matters in their annual report.

Look out for more information about these requirements in the updated version of our fundraising guidance (due in June) and in our updated accountancy guidance.

5. Automatic disqualification changes

Next April will see some badly needed strengthening of the list of reasons that will automatically prevent someone from being a trustee and will include, for example, unspent convictions for terrorism or money laundering, or individuals who have been convicted of certain sexual offences. It’s also going to mean that all the automatic disqualification provisions (including the existing ones covering bankruptcy, individual voluntary arrangements, convictions for dishonesty and deception related offences) will cover senior managers such as those in chief executive and finance director positions.

We’ll be issuing more information to help charities identify if these disqualification provisions will affect them. The start date, April 1 2017, is a long way away but we know that charities will want to prepare in good time. Those who are disqualified will need to stop acting in these positions or apply for a waiver, which will be decided upon on a case by case basis. We’ll issue a timetable and more information on this soon.

The overall timetable that has been published will help us at the Charity Commission plan and prepare to use the new powers we have been given. It will also give charities and trustees the opportunity to plan for any changes that they need to make as a result of some of the new provisions.

We will be communicating all the changes you need to know about – this blog is a start of that process. So, follow us on twitter, sign up for updates and Charity Commission news and keep an eye on the website in the coming weeks and months.