Thursday, 18 July 2013

The Charity Commission

The BBC radio programme “File on 4" had a fascinating story about the Commission and tax avoidance which I listened to in the sweltering heat in my Brixton garden on Sunday. The CC did not come out of this well.

I suspect the route problem is that the Commission still do not operate as a regulator, but see themselves as a quasi judicial body, always looking over their shoulder at process, legal precedence and with a risk adverse nature. This partly reflects their history. When they were set up as a commission (in its current form) in 1853 they were indeed a quasi legal body and not a regulator. Though it has to be said even then they had teeth. I've blogged before about cases where they shut down public schools where they found the benefactors wish to educate poor people had been traduced by trustees only  educating rich kids. Earlier in the 19th century they had recommended to Parliament the dissolution of the City parishes and redistribution of endowments for public benefit; buying public spaces in London for example.  Can you imagine the current CC being so bold?

No one has the right to be registered. No one has the right to remain a trustee if they don't perform effectively (yet only one trustee has been removed from a board in the last decade). And no one has the right to remain a charity if they are abusing the privilege. And that is not just about the legal form, it’s about intent and outcomes, and having a bit of bottle. What we needed with the Cup Trust was firm and decisive action to shut it down when evidence emerged about what they were actually doing. Margaret Hodge MP, the feisty and forensic Chair of the Commons PAC was right to give the Chair of the Commission a hard time at the hearing and her incredulity about their failure to act is shared by us all.

The Chair of the Commission has made a number of interesting speeches of late, touching on various matters of public policy and charities. A little less of this and a little more on the regulatory job and how he sees reform at the CC going would be useful. He has a leadership role and needs to demonstrate he understands the anger we feel in the sector over the Cup Trust issue.

One of the most telling stories on the programme was from a former senior person at the Commission who wanted to take firmer action on sham charities acting to avoid tax but was told there was no appetite for action from senior management. If this is true then there are serious questions to answer.

 The Cup Trust fiasco should have been a wake up call to the Chair and CEO of the Commission and yet they appear to believe they acted properly and could not have done things differently.
After the abysmal performance of the CC before the PAC, the National Audit Office are to investigate. We need to ensure our charity voice is heard in this review. Acevo will be responding.

In acevo we know of so many stories of bad governance. Our books are full of the stories of mad, bad and dangerous to know trustees. We wrote recently to the CC about one case where there was strong evidence of such but had such a wimpish response. It was the sort of letter you would get from a solicitor, not the sort that you would expect from a regulator. Of course we need proper process but I would like to feel a stronger hand being taken to regulate bad practise, poor governance, and using the powers they have.

One of our key tasks as the lead body representing charity leaders is to support and advise CEOs. Often that involves advice around governance issues. So we hear many tales of poor chairs and trustees. There are also very good trustee boards but as so often happens bad cases get more air time than good. My Director, Jenny Berry spends much time handling the bad cases and trying to sort them. It is taking increasing amounts of her time as sector funding gets tighter and demand rises. I'd like to think when we have bad cases we could approach the CC but we know that is problematic under the current approach.

It is crucial we have a properly funded Commission and the recent further cut to their resources is worrying, but it also requires a change of culture and attitude. It needs to get some teeth and probably more regulators and fewer lawyers.

We need a strong regulator. The board of the Commission has changed dramatically this year. 7 of the 8 members are new and the only other member currently on the Board leaves in January. So a new broom. But of the new people only one has serious experience of our sector. Good or bad?  We shall see. What we do know is that this could be an opportunity to change.

 A vigorous approach to tax avoidance is essential.  Close down charities that act in this way. Any further examples of such need to be routed out if damage is not to be done to our sector generally. 

So good luck new commission board members. We are watching and waiting.

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