The All-Party Parliamentary Group on Charities and Volunteering: Update from the regulators

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15.00-17.00 Tuesday 27 November, Committee Room 14, House of Commons

Annual general meeting

Susan Elan Jones MP opened proceedings by initiating the Annual General Meeting for the group.

Susan Elan Jones MP (Labour Party), Lord Hodgson of Astley Abbotts (Conservative Party) and Baroness Pitkeathley (Labour Party) we are re-elected as Officers of the group.

Martin Docherty MP (Scottish National Party) was re-elected as Vice-Chair and Lord Shinkwin (Conservative Party) was re-elected as Treasurer for the group.

All re-elections as officers of the APPG were both proposed and seconded.

Update from the regulator

Susan welcomes the room and introduces the speakers, Tina Stowell, chair, Charity Commission and Helen Stephenson, chief executive, Charity Commission. Susan says that apologies have been sent from David Robb, chief executive, OSCR.

Tina Stowell, chair, Charity Commission

  • The Charity Commission’s new strategy was published at the start of October this year.
  • The aim of the strategy is to get charities to deliver the most possible to society, one which the Commission believes is a shared ambition with the organisations they regulate. They believe the regulator and the sector have a shared responsibility to uphold what it is to be a charity in the eyes of the public.
  • Baroness Stowell laid out her view of the current state of the sector:
  • It is an important, in-demand and continually growing sector, with increasing pressure on it.
  • The need for the sector is felt strongly by the public.
  • Alongside demand, there is a corresponding fall in public trust and confidence in the sector as a whole.
  • The Charity Commission wants to respond to the challenge in public trust and confidence to address the obstacles getting in charity’s way.
  • The Charity Commission wants to become a purpose-led organisation and to define itself more clearly as ‘more than the sum of [its] regulatory parts’.
  • The purpose of the Charity Commission is to ensure charities can thrive and to ensure public trust in the sector. This purpose is behind everything the commission does and drives its five strategic objectives.
  • Research into public trust that the Commission delivers biennially (and released earlier this year) shows that lessening public trust is a symptom of wider issues in the sector.
  • The Commission wants the sector to understand that the public is no longer automatically trusting of charities, and that charities need to focus on reassuring them by delivering their charitable objectives in a way that matches the expectations of the public. The Charity Commission needs to understand these expectations in order to support charities to make sure they are reaching them. People are looking to be convinced consistently that charities are working towards these expectations.

Helen Stephenson, chief executive, Charity Commission

  • Ms Stephenson opens by stating how importance giving time and money is to our society, and how important it is that charity allows us to do so.
  • She describes an ‘ecosystem’ which supports charitable endeavour, and places the regulator at the heart of such an ecosystem
  • She then states how the Charity Commission’s new strategy aims to ensure that charity can both thrive and maintain public trust.
  • She then goes over the five objectives of the Charity Commission’s new strategy:
  • Holding charities to account
  • Dealing with wrongdoing and harm in the sector
  • Giving charities the tools they need to succeed
  • Providing the best source of information about charities in order to inform public choice
  • Keeping charities relevant
  • Ms Stephenson closes by saying that the strategy sets out a vision for the regulator that the Charity Commission wants to be and what they hope the future will look like. She explains that some of the detail in the strategy is aspiration and requires the commission to start new projects, continue existing projects and to change the way in which things currently work.

Questions

Susan opens the floor for questions.

  • Baroness Pitkeathley: It is very interesting to hear the Charity Commission set out their vision. We have recently had a few visions for charities (the Civil Society Strategy, the Unwin report, the Charity Commission vision) in recent months. Do you see these visions as a cohesive whole? Secondly, can these visions inform one another and be moulded together?

Baroness Stowell: All three publications add up to a coherent vision for the future of the sector. What unites all of the reports is the desire for charities to deliver as much as they possibly can for the benefit of society. What is interesting about the government and the Unwin reports is how they talk about the expanding need for charities to build bridges across divides which have been exposed over the last few years due to political events. The Charity Commission comes into this by considering how the regulator and the regulatory framework can make sure that charities themselves are also able to help address these issues.

Helen Stephenson: All of the reports recognise the change that is happening in the sector, both in terms of demand, as well as the breadth in which charities work is growing. There is also a change in the way in which the public view all institutions, with an expectation for all institutions in public life to be held to a high standard. All three strategies recognise this and attempt to address it. Julia speaks on behalf of civil society, the Charity Commission speaks out on behalf of the regulator, and the Government on its own behalf. We hope to work in partnership with the sector and with Government to address the issues each of the reports set out.

  • Lord Hodgson: Do you think one of the reasons people are concerned about charities is the numbers volunteers is going down and the number of professional and paid staff in organisations is going up is stressing the public?

Baroness Stowell: There is definitely a disquiet amongst the public around charities, we have research that backs up that the public are no longer willing to give charities the “benefit of the doubt”. Evidence shows that people point to different things (chief executive pay, paid staff more widely) but this is simply what people use to substantiate their lack of confidence. What I would argue though, is that we should not fixate on those specifics, as these specifics are proxies for an underlying concern. However an organisation is operation, can it as a charity show that all of the decisions it makes are in the pursuit of its charitable purpose, and to make a difference in the lives of its beneficiaries. Every organisation should be able to justify their decisions as directly in pursuit of their purpose, and they should recognise people will want to see and to understand that link.

Helen Stephenson: I recently published a blog about this. There is not a monogamous view of the public on charities, and different groups valued different parts of charities (some valued big delivery charities, some value local community groups delivering purely with volunteers, some have high standards across the board), but everyone wanted to see higher standards in the way in which charities operate. As we’ve developed our strategy, we’ve recognised that people want and see different things in the importance of charities, but we still need to try and uphold all of these needs across the work that we do.

  • Susan Elan Jones MP: I want to bring up the issues around campaigning with regards to the lobbying act. What sort of guidance is the Charity Commission going to provide in the future on campaigns, whether or not an unforeseen election is called? Both larger and smaller charities are concerned about how and how much they can campaign.

Helen Stephenson: The Guidance written in 2008 on this subject has not changed. It is available for all charities to see and use. We will respond quickly if and when an election is called. It is widely perceived that the Charity Commission guidance on campaigning and political activity is clear, and charities know they can approach us to understand when and what they can do. Advocacy is important to some charities in order to reach their charitable objectives. We hope that others will recognise that the Charity Commission has been clear and consistent on this since 2008.

  • Q: James Legg, Countryside Alliance: We have lots of dealings with charities but we ourselves are not a charity. We have a concern about shooting and hunting campaigns not being a charitable activity, but campaigning against them counts as charitable activity. We have complained to the regulator about this multiple times with regards to specific charities. We feel that charities are free to break the rules on campaigning with the Charity Commission. Is there a point at which the Charity Commission will turn around and threaten to remove charitable status on charities who are breaking rules around campaigning?

Baroness Stowell: Any charity which is in breach of the rules needs to be subjected to proper and proportionate regulatory action. If there is a continual failure to meet the rule, our regime allows for an escalation. There was a new act of parliament in 2016 that allowed new powers and we are testing the limit of those powers. The Charity Commission is testing those powers in order to make sure we have maximum gain from them before we go back to ask the Government for additional powers. The Charity Commission does not have the power to use absolute discretion for charities trying to come onto the register. We are not in a place where we want to demand this power, but we will also continue to keep our powers under review.

Helen Stephenson: In terms of using our powers, both new and old, we are committed to being robust in our use of them. We will push the boundaries on all of our powers. Parliament set quite a high bar on the limits of our power, and we have to show lots of stages in our process to demonstrate why we have used each of these powers. We continue to feedback to Government on this.

Lord Hodgson: it is extraordinary that the regulator does not have the power to decide who is and is not within their sector.

  • Karl Wilding, NCVO: On public expectations, it strikes me that the public simultaneously expects the opposite in practice when they engage with charities through donating or volunteering (flexibility, speed) than they expect in terms of charity regulation. How do you support charities to manage these burdens and still keep up with the rising expectations on charities? I am concerned the public trust part of the Charity Commission’s vision will be seen as additional work for charities.

Helen Stephenson: I am not sure that the public trust as part of the Charity Commission’s new vision will be seen as regulatory burden for charities. We are definitely not setting up a new regulatory burden for people, and we want to do more of helping charities to observe the rules and to meet the expectations of the public at the same time. As a regulator, the opportunity for us to stand alongside other organisations like NCVO to help charities live up to the expectations and the privileges of being a charity.

Baroness Stowell: I imagine and hope that those who volunteer and donate to charities should “get it” that they want to support and make a difference, and therefore will understand that this comes with expectations to deliver the ultimate aim of that charity. We are definitely not adding more rules and regulations. Using healthy competition as an example, how can the small charity and the big charity work collaboratively to serve their beneficiaries to deliver a service rather than compete (which might be against public expectation). For example, we recently had a case of an individual man upset because the charity who owned the field behind him weren’t looking after it properly, this is another example of where a charity is not meeting public expectation.

Karl Wilding: Although I agree personally, it strikes me that is a very bold statement for a regulator to get involved with individual issues like that.

Helen Stephenson: We are absolutely not planning to take regulatory action on an issue like that, but it is important to feedback those kind of issues to the sector as this is the way that the public thinks and feels.

Karl Wilding: It seems that the public will have a broad understanding and range of views on these kinds of issues, so it feels as if you are setting yourselves up to fail on that kind of issue.

Helen Stephenson: The public care deeply about the way charities behave, not just what they do. There are lots of things that come into me that do not live up to what I expect from charities. An example I like using is the merger of two breast cancer charities recently, putting the needs of their beneficiaries before their own organisational requirements. Our role as a regulator is to communicate where we can help and then support when it reaches the regulatory threshold.

  • Q Pauline Broomhead, The FSI: The Government strategy and the Unwin report both seem to show that charities are being looked to lay a greater role in civil society and as such are meeting many more complex needs than in the past. They are also being asked to address gaps in public service provision, and this means that they are having to employ professional staff to deliver these services and to meet complex needs. The Charity Commission strategy says it has a responsibility to make sure the public understand how charities work; how will the commission help the public to understand the above? How will this manifest itself in what is coming out of the Commission?

Baroness Stowell: Charities are now having to deal with more complex need, and one of the challenges for the sector is that there is a complexity in the way different charities operate. As far as the role of regulator, we don’t see it as our role to help the public understand the way charities work. Charities taking on contracts and behaving in a particular way needs to always still ensure that the charity is continuing to benefit their beneficiaries as best they can. I don’t think we need to explain the complexity, but the only way charities can to continue their vital work is by explaining to the public what they do.

Helen Stephenson: Our role is part of the ecosystem here to ensure charities can thrive. It is organisations like NCVO who want to represent charities to the public. It is about us all being a part of the system.

Baroness Stowell: One final point, the more that the Charity Commission can reflect out to the public that we understand why they need assurance, the greater the space we create for charities to explain the complexity behind what they do and why they do it.

  • Q Mark Hollingsworth, Nutrition Society: A question on resources. Do you see a way of bridging the gap between what you can achieve and what you’d like to achieve in the strategy? Are the Commission still considering a levy?

Baroness Stowell: We were very clear that the Commission had to set out a clear and bold picture of why it exists and what it is it needs to achieve, including how we think this should be done. All this we did knowing that we did not have the resource to achieve all of this. We wanted to think about the regulator more widely that its statutory role. Our strategy is our contribution to helping the charities that we regulate to fulfil their potential, but on our own we cannot deliver all of this and charities need to participate. In making this case, we hope to gather the support for changes and differences in working in the Commission in order to achieve our part of the equation. When I became chair, I said I would not talk about resources until after we had developed a strategy. Charging is still on the table, but we are not considering it just yet.

Helen Stephenson: My role as chief executive is to be as effective as possible with the money the Commission has. We were pleased to get more money from the government last year in recognition that our need was greater than our resource. We want to digitise and prioritise. To digitise, we need bigger charities being asked more and smaller charities less to give smaller charities less bureaucracy and make it easier for all charities. To prioritise, we need to focus on the cases that suggest the most risk to charities and beneficiaries and show they most significant issues when they come in.

  • Q Heather, from an International Development charity: How much do you think the gap in public trust is related to the changing role of charities, and what can our sector do to explain these changes better?

Helen Stephenson: Obviously we want to play our part in terms of helping charities to do this. One of the aims in the strategy is about keeping charities relevant, and that for the commission is still in early stages in terms of identifying exactly what this means. One of the examples for me is of the trustee research published last year in partnership with organisations across the sector, which was positive but demonstrated some issues around diversity and reflectiveness. This is an example of the Charity Commission using data and evidence it collects in partnership with the sector in order to shape the debate on how the sector can stay relevant to the society it supports.

Baroness Stowell: Whatever charity you are, however complex you are, however big/small you are, if you are on the register, this has to mean something. That is what people are looking for. You raise a good point around the way the sector has changed, but the complexity means nothing. Charities need to understand how they work well enough to explain this to the public.

Susan Elan Jones MP: I am hoping to bring a ten minute rule bill to Parliament relating to the role of trustees and the regulation of this. I think this will help with diversity, as diversity is about getting more and different people involved in being a trustee.

  • Q Baroness Pitkeathley: I am on a House of Lords Committee on rural community. I live in the countryside. It strikes me that those giving the service are increasingly those who are needing the service (age, health needs, driving capacity, far away form family), do you have any doubts about the supply of community and volunteer roles for the future?

Helen Stephenson: I am positive that the numbers of young people volunteering and getting involved in social action is increasing. I am sure this will be nurtured into volunteers and trustees to support charities throughout their lifetime.

  • Q Elizabeth Chamberlain, NCVO: The Commission is seemingly talking about taking an interest in behaviour within charities. I believe everyone relating to charities should behaviour that reflects the charities values, but this also indicates a shift in the commission in terms of its traditional framework. What is the Charity Commission’s thinking behind this, and how can this actually be done?

Baroness Stowell: We need to not confuse regulatory action and expressing (on behalf of the public whose interests we represent) what we expect of charities. We are just trying to reflect back into the sector what it is we have learned through our work that people need to see if they are to be reassured that charities are matching public expectations. We are trying to reflect back what we understand from the public, but we are not going to use our regulatory powers to hold these expectations to account in terms of the way a charity is behaving. An example is the Presidents Club scandal, that charity met its charitable purposes, but the problem was how it went about doing so. In reaching the conclusion the commission did, it was important that the commission could vocalise that in line with what the public expected from a regulator.

Helen Stephenson: I get slightly frustrated that people are deliberately misinterpreting this as us trying to regula te people’s behaviours. We are just wanting to get charities to thrive by encouraging the type of behaviour that people expect from charities.

Elizabeth Chamberlain: Certain messages coming form a regulator can be misunderstood, though. Although I understand the reasons behind your concerns, we are feeding back that there is concern and confusion in the sector in areas that are greyer than the Presidents Club example.

Baroness Stowell: it is not black and white and that is why we are not prescribing any sets or behaviours. I understand the point you’re trying to make, but charities who we regulate, if they are concerned about public trust, it is important to understand the reasons behind that. This sector is far too precious for the sector itself not to take this seriously.

  • Q Susan Elan Jones MP: A question on fundraising regulation. Now we have a fundraising regulator, what is the role of the Charity Commission?

Helen Stephenson: fundraising is regulated by the fundraising regulator who we work closely with. Sometimes the issues they deal with tip over to trustees and governance, and these are passed onto us. When fundraising practice is poor or outside the code the regulator will deal with that, but when the management and trustees are involved it would tip over into something we would have concern about.

Closing statements

Susan thanks Helen Stephenson and Baroness Stowell for coming to the meeting, and closes the meeting.

A reminder that next month is the joint Christmas reception for NCVO and this APPG on 12 December at 4pm.

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