Policy, Policy, campaigns & research

What is the mandate of the Charity Commission?

DSC Trustee Andrew Purkis reminds us that the regulator’s role is clearly spelled out by Parliament in the Charities Act, and that there are four other statutory objectives apart from the Public Confidence objective. Do you know what they are?

Whether you’re a Board or staff member of the Charity Commission, a charity trustee or other user of its services, a commentator or critic, it’s helpful to remind ourselves of a few things as a new year gets under way.

What have the representatives of the people in Parliament actually told the Commission to do?

Quite a lot of discussion about this in 2019 proceeded as if its role and functions were not spelled out in some detail in the 2011 Charities Act.

For example, one hears critics complain that the Commission should stick to its core role of enforcing the law. Good practice should be left to the sector, say some. The Commission itself seems to feel it must argue constantly that it is not enough for charities to obey the law. It devoted some of its research to showing that focus groups agree…

Hang on a minute. All this is set out perfectly clearly in the Charities Act. Why not cut the unnecessary waffle and have a look at it?

One of its five statutory objectives is promoting public trust and confidence in charities. I have always agreed with the Commission and many others that this must involve more than compliance with the law alone. Indeed, the compliance objective is identified separately in the Act, so was certainly not intended by Parliament to be synonymous with the public trust and confidence objective.

Parliament also gave the Commission the charitable resources objective which is to promote the effective use of charitable resources. That obviously goes beyond enforcing the law. No question.

It also mandated the accountability objective, which is to enhance the accountability of charities to donors, beneficiaries and the general public. That also obviously goes beyond enforcing the law. Please note, Commission Board members: Parliament went to the trouble of distinguishing between donors, beneficiaries and the general public rather than simply assuming that “the public” is a monolith.

Parliament also mandated the public benefit objective: “to promote awareness and understanding of the public benefit requirement”. This is the requirement that charities must be run for the benefit of the public, not just a small section such as the very wealthy, and not for the personal benefit of the Founder, Trustees or staff.

Achieving, assessing and reporting on public benefit is also a mixture of “must” and “should”, i.e. of legal requirement and good practice, as the Commission’s guidance on the subject makes clear. You might be forgiven for forgetting that this statutory objective exists, as it seldom if ever passes the lips of the Chair or Chief Executive, but the duty does exist, and some of us think it is very important.

Parliament also specified functions including “encouraging and facilitating the better administration of charities”. That again unquestionably goes beyond enforcing the law.

As the law stands, therefore, the Commission is mandated to promote good practice in different dimensions as well as enforce the law. There is no need to keep arguing about it or spend money on focus group research to establish it.

Of course, exactly how best to achieve these objectives, and in what sort of collaboration with sector bodies, is a different and important issue. Practicable priorities also have to be established within a limited budget.

What is the most sensible way of establishing what good practice is in all these dimensions? Who decides what is meant by the better administration of charities, or accountability to different stakeholders, or the effective use of charitable resources, in a way that commands the most widespread and active assent?

Let’s debate all that. DSC will continue to play a strong part in that debate, as we mind about the Commission’s contribution and don’t consider that its current approach is working well enough. As we go forward, let’s base the discussion not on unanchored assumptions nor on itty-bitty research into public opinion, but on the actual mandate given by Parliament.

There can be no doubt about the principle that, under current law, it is the Commission’s business and duty to promote good practice, not just legal compliance, in multiple dimensions. Nor is there doubt that they should be held to account by Parliament (and also, less formally, by those of us steeped in the charity sector) for their performance in carrying out all of the objectives and functions in their mandate – not just some.