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Rocked by recent scandals, is the charity regulator fit for purpose?

11 min read

The third sector is trying to find its feet again and rebuild trust after a decade of scandals and controversies. But where does the regulator, the Charity Commission, come in - and is it fit for purpose? Georgina Bailey reports

In the last decade, the charity sector has been rocked by several scandals and controversies, including 2018’s sexual abuse and subsequent coverup scandals involving Save the Children and Oxfam.

The stories were shocking. Sexual exploitation of vulnerable beneficiaries by Oxfam staff in Haiti in the wake of the 2010 earthquake had been covered up by the charity.

At Save the Children, the charity was found to have mishandled complaints of alleged sexual harassment and inappropriate behaviour against senior management.

Reports by Charity Commission, the sector’s regulator, condemned both organisations harshly.

Prior to these there was a scandal of a different nature involving the charity Kids Company: allegations of financial mismanagement, and a close relationship with government which led to the charity receiving at least £47m of public funding, some of it against the advice of officials. 

A High Court ruling in February exonerated the trustees and the CEO and found that the charity’s business model was sustainable. Justice Falk said that had it not been for "unfounded" claims that allegations of sexual abuse had not been properly investigated or disclosed to the authorities, it is more likely than not that the charity would have survived. The police investigation subsequently found no evidence of criminality or failures of safeguarding.

The Charity Commission report into the charity’s collapse has now resumed, having been put on hold due to insolvency proceedings which concluded earlier this year. The Commission could not say when the report would be published.

More recently, third sector controversies have been centred around the role of charities in the so-called “culture war,” and whether they have the right to make statements perceived as political. The Charity Commission has been in the middle, investigating complaints into the National Trust and the Runnymede Trust raised by Conservative MPs.

We as the Charity Commission are here to serve and protect

Underpinning these difficulties is a complex regulatory set up, involving different government departments, inspectorates, and the sector’s regulator, the Charity Commission.

“A guiding tenet is we always put the public and the public interest at the heart of everything we do,” says Helen Stephenson, CEO of the Commission. “Charity is about individuals who want to give their money, their time, to help people, to help their communities and do good.

“We as the Charity Commission are here to serve and protect. If you look at it even just from our statutory framework, we are required by Parliament to increase public trust, and confidence. That is at the heart of what we do. Our job is to really maintain the bond of trust between charities, the public and the state.”

After a damning National Audit Office report in 2013 found the Commission was not an effective regulator, failing to take action in serious cases and making poor use of its powers, the Commission has made significant improvements, including pivoting towards a more risk-based approach to regulation and using powers to remove or bar trustees from service more frequently.

However, there are ongoing concerns that the regulator is both underpowered and under-resourced, with one charity source describing its work as a “thankless task”. While 90 per cent of trustees told the Commission last year they felt confident the Commission would deal appropriately with wrongdoing and harm once uncovered, only 75 per cent felt confident in its ability to actually uncover wrongdoing.

Many in the sector told The House they feel the Commission is putting too much emphasis on its duty to increase public trust, rather than focusing on its other duties to promote compliance with charity law.

Andrew Purkis, a former Charity Commissioner, says: “The Charity Commission [board] is not qualified. They’re quite a small number of people that haven't been elected; they're appointed people. They're not really equipped to be representatives of the public. So going around saying the public expects this, the public expects that, the public expects behaviour like this – that was actually moving away from [the Commission’s] area of legitimacy and authority.”

Stephenson says that while the Commission “will only ever regulate in line with legal and statutory framework, we're not going to step outside of that,” it is important that the Commission understands public opinion, and to that end, commissions regular research.

Last year’s report (conducted pre-pandemic) showed public trust in the charitable sector was at its highest in many years, at 6.2 out of 10 – although still lower than its 2014 level of 6.7, and all preceding years.

The report showed the percentage of people who said charities play an “essential” or “very important” role in society had dropped to 55 per cent, compared to 76 per cent in 2012.

The research also showed that 53 per cent of the public think the regulator should “try to make sure charities fulfil their wider responsibilities to society as well as sticking to the letter of the law”.

The Commission says the latter is outside of its ability, but while those in the sector recognise the impact of previous scandals and political upset, many think that the language used by the Commission is unhelpful, with too much “finger wagging” and public berating from the previous two chairs of the Charity Commission, William Shawcross and Baroness Tina Stowell.

Multiple trustees and charity staff who spoke to The House in the sector describe tense relations between the sector and the Commission. Kristiana Wrixon, head of policy at the Association of Chief Executives of Voluntary Organisations (ACEVO), says the relationship between the position of chair (currently vacant) and the sector is now at its “lowest ebb,” with increasingly political appointments and public criticisms.

In particular, Stowell’s closeness to the government (she served in David Cameron’s cabinet for two years) and lack of experience damaged her credibility with the sector; the Digital, Culture, Media and Sport Committee unanimously refused to endorse her appointment due to "a complete lack of experience" and a lack of "any real insight, knowledge or vision".

The work of the Commission is varied, regulating 160,000 registered charities in England and Wales on a wide range of issues from registering new charities, monitoring financial propriety and safeguarding.

Many in the sector say they would now prefer the Commission to focus more time on promoting charity law and best practice, and defending the sector where necessary, rather than getting drawn into furore around the “culture war” and the role of charity in society.

Stephenson says they have undertaken lots of work on simplifying best practice guidance for trustees, and did huge amounts of work in the pandemic to provide support.

“We're here to help [trustees and charities] and support them to get it right, run their charities well, and therefore increase impact to our society. But also to be there if it goes wrong, and to be able to call out wrongdoing, to protect from harm, and to ensure that the notion of charities is really protected in our society. As a regulator, we are only effective if we do both of those things. Because if we can help more people get it right, we are not going to be having to intervene further down the line if things go wrong,” Stephenson says

If you ask most in the sector whether anything could have been done to prevent some of the recent safeguarding scandals, the answer is “I don’t know”. However, there is widespread agreement that such coverups are unlikely to happen again now. So what has changed?

While all serious incidents, including safeguarding, must be reported to the Commission, it is not a statutory safeguarding agency. As Stephenson explains: “We don't have criminal powers, we can't intervene in individual cases. Our job is to make sure that trustees are dealing with safeguarding issues by having those right policies, procedures and culture in place.”

If a safeguarding incident (where a young person or vulnerable adult is put at risk) does occur within a charity, there are several agencies that may need to be involved including the police, Ofsted, the Care Quality Commission, the Office of the Public Guardian, and local authorities.

In the light of the international development sexual abuse and exploitation scandal, the Commission set up a safeguarding special taskforce to deal with reports, while the Department for Digital, Culture, Media and Sport led on work with domestic charities to improve safeguarding culture and the Department for International Development (now absorbed into the Foreign Office) did the same in the international aid sector. All organisations who work with the government on international aid must now sign up to commitments on safeguarding, and umbrella bodies across the sector have continued to work to inform sector leaders and promote best practice and guidance on safeguarding and whistleblowing.

In its 2019-20 annual report, the Commission said it had seen a 47 per cent year-on-year increase in serious incident reports and a 33 per cent increase in whistleblowing. Of these 5,730 serious incident reports, nearly 60 per cent (3,411) related to safeguarding.

They cannot properly ignore the publicly declared complaints of important public figures like MPs

While this increase may seem concerning, Stephenson and Stephanie Draper, CEO of the international development network Bond, agree that an increase in reports is actually indicative of a system that is working.

Draper says: “We have to recognise there are always risks of safeguarding incidents. We need cultures that work hard to prevent them and systems and processes to do that. And then if they do happen, we need a survivor-centred approach where we deal with them effectively, and they are reported on and addressed.”

While Draper welcomes the progress that has been made, she remains wary of the Commission’s response to serious incidents, a view echoed by others in the sector.

“Our members have concerns that responses to serious incident reports can be delayed and inconsistent. If you are reporting a serious incident, you will be deeply concerned about it, and you hope for a prompt response, or at least a sort of acknowledgement,” she says.

“Some of that lack of resourcing [in the Commission] does mean that members are unsure, are they over reporting? Are they under reporting? A bit more guidance in that space and more prompt responses would really help us to make sure that we are addressing safeguarding incidents and providing that safe culture that we want.”

There have been dramatic improvements to how the Charity Commission processes casework – in April 2019, the backlog meant assessment was taking an average of 40 days. By 2020, incoming work was being risk assessed and allocated to the correct area of the organisation within five working days. The form for serious incident reports has also been improved – previously, only 30 per cent of reports included the information required. Now, it is 90 percent, with all reports receiving a formal response within 10 days.

Stephenson says only reports that need further action are followed up – in the vast majority of cases, they often they are already being handled correctly by trustees and therefore no further action is needed.

Suggestions from parts of the sector for further action to improve safeguarding include: more frequent communication after a report is made; the Commission putting together summaries of reports made in order to better map areas of concern; sampling of charities’ annual reports to ensure safeguarding training is being undertaken; or even an the creation of an inspectorate like Ofsted.

On the other point of contention – the right of charities to campaign – the upcoming appointment of a new chair will be closely watched by the sector. While Stephenson has publicly upheld the rights of charities in this area, the increasing pressure from some politicians on the issue is causing concern. 

“It is a very difficult position the Commission finds itself in,” Purkis says. “On the one hand, it has to try to uphold and champion the rights of trustees to pursue their charitable objects in a conscientious way that they think is most effective. On the other hand, they cannot properly ignore the publicly declared complaints of important public figures like MPs who've been elected to Parliament by lots of different lots of people. It isn't an option for the Charity Commission, just to say, ‘Sorry, but we don't think there's any merit at all, and we're not going to bother to answer your complaint’. It's not easy. But they have to find that balance.”

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