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Alice Faure Walker
Senior Consultant
The House of Lords Select Committee on Charities published its report on 26 March 2017, making wide-ranging and extensive recommendations designed to support the sector in coming years.
Senior Consultant
On governance, the report recognises the importance of trustee training and development. It recommends that infrastructure bodies review training opportunities that exist, and address any shortcomings. At the same time, a number of recommendations are made in relation to internal policies and procedures that charities should implement to promote transparency, efficiency and diversity.
Recommendations to charities:
Recommendations to Government and sector bodies:
The committee concluded that the commissioning landscape is skewed against smaller charities. It recommended:
A wider understanding in the public sector of the use and potential of grant funding is highlighted in the report, and local authorities are encouraged to maintain or revive grants wherever possible.
Issues of increasing bureaucracy, levies and associated costs for charities are considered in the report. Generally, the committee concluded that infrastructure bodies should work together to improve their services and ensure that all charities, and particularly smaller charities, can access their advice and support. Other measures designed to support sustainability include:
The committee’s report states that charities may risk organisational stagnation and decay by not embracing digital technology. To avoid this, charities should actively consider including a digital trustee role on their boards, which would also promote board diversity. Infrastructure bodies and the technology sector should support charities by sharing best practice on innovation and digitisation across the sector, and co-ordinating training opportunities.
The report comments that, currently, the expectations placed on Social Investment Bonds have yet to materialise. The Government should redouble efforts to make them work better and future public funding should be reoriented towards financial products which have application to a wider range of charities and beneficiaries.
The committee’s view is that the social investment market is unlikely to reach its potential unless there are further resources to support the investment readiness of smaller charities in particular. The committee welcomes the Government’s efforts, through the Access Foundation, to broaden the accessibility of social investment to small and medium sized charities, and the measures taken thus far to reduce transaction costs for social investment and promote the market for a wider range of investors.
1. Campaigning
The committee is clear about the importance of supporting advocacy by charities, saying that “through their advocacy [they] help shape our laws, government policies and society as a whole”. Whilst charities are quite properly regulated in their campaigning activities, particularly at election times, the committee stressed that any new regulation or guidance should clearly recognise that advocacy is an important and legitimate part of a charity’s role.
The committee endorses the recommendations in Lord Hodgson’s 2016 review of the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administrations Act 2014, which its says will provide reassurance to charities that they will not face censure for carrying out ordinary campaigning activity during election periods.
2. Charity Commission
The committee commends the Charity Commission’s work to improve its effectiveness, but says that there is much still to do until it can be considered to be fully effective.
Charity staff and trustees with concerns should be encouraged to report them to the Charity Commission where appropriate. The Commission should ensure that charities which are proactive in reporting issues to them will be supported to help put things right.
The Charity Commission should be clearer about what support it can and cannot offer to charities and should be proactive in helping charities find appropriate sources of external support and advice.
In order to remain politically impartial, the Charity Commission should take care in all its public communications to ensure that it retains the confidence of the public and the sector.
Commenting on the Charity Commission’s proposals to consult on charging for its services, the committee expressed grave concerns. It asserted that the Treasury should, in any event, maintain adequate direct funding of the Commission.
3. Government engagement with the sector
The committee commented that Government should review its approach to engagement with the sector before policy announcements are made, with a view to ensuring that charities feel better informed about legal changes which may affect them and can provide input on new policies.
In particular, Government must improve the way it consults on matters affecting the sector in Scotland and Northern Ireland. It should also ensure that charities are better involved in regional devolution.
With regards to Brexit negotiations, the committee recommended that the Office for Civil Society undertake an extensive audit of the potential impact on charities.
The committee highlighted the importance of Compacts between public bodies and voluntary organisations. Compacts should be re-established and/or reviewed. National and local government should re-establish and/or review their Compacts in consultation with the sector. They should restate their intent to apply the principles of the Compact and include a mechanism for review to ensure they are observed.
The full report is available here.
If you have any questions regarding the content of this article, please contact Alice Faure-Walker, a Senior Consultant in our Charity and Social Enterprise department.
This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.
All content on this page is correct as of April 6, 2017.