Press Release - Giving Confidently: The Role of the Charity
Commission in Regulating Charities
25 October 2001
Sir John Bourn, head of the National Audit Office, has welcomed
progress made by the Charity Commission in tackling concerns
previously raised about its performance by the National Audit
Office and the Public Accounts Committee. Scope for further
improvement remains, however, particularly in the Commission’s
approach to investigation where problems arise among registered
charities and in its oversight of charitable trustees.
The main findings in today’s NAO report on the Charity
Commission include the following.
- Proven cases of maladministration or abuse among registered
charities are relatively rare. The Commission is completing its
investigations more quickly but there are weaknesses in the
Commission’s approach to deciding the scope of investigations, in
its approach to monitoring the progress of investigation cases and
in its arrangements for ensuring that effective remedial action is
taken by charities. The Commission is responding with a one third
increase this year in planned spending on
investigations.
- The Commission is scrutinising applications for registration
for charitable status more rigorously, and the Commission has also
improved its procedures for checking whether prospective trustees
of new charities are disqualified from acting as trustees. There
are, however, no equivalent arrangements for checking trustees
appointed to existing charities.
- Customer satisfaction with the Commission’s advice and support
remains high, and demand for these services has risen by more than
42 per cent in the past five years. The Commission is having some
difficulties in dealing with this increase, and the number of cases
carried forward from one year to the next rose from 4,500 in
1996-97 to 9,200 in 2000-01.
- The Commission has made a significant effort to improve the
quality and timeliness of the annual information it collects from
charities. Its monitoring procedures could still be enhanced to
help identify potential weaknesses in the governance of charities.
The Commission should encourage charities to do more to demonstrate
that they are using charitable funds efficiently and
effectively.
The NAO recommends that the Commission build on its current
progress by:
- clearly defining the scope and objectives of its inquiries into
the conduct of charities at the outset and basing these on a formal
assessment of the risks to be tackled;
- where serious weaknesses are identified, checking that remedial
action is taken by charities;
- issuing good practice guidance to help charities identify,
recruit and appoint new trustees, including checks on applicant’s
eligibility to act as a trustee, and establishing arrangements for
ensuring charities adopt best practice;
- encouraging larger charities to provide in their annual reports
more information on the efficiency and effectiveness with which
they have used charitable funds; making it clear what was achieved
against what was planned and explaining any significant
variance;
- comparing the financial performance of similar groups of
charities, for example, the ratio of fundraising costs to funds
raised; and, by making the results of these analyses publicly
available, provide a benchmark for charities and donors to use;
and
- monitoring the risks to good governance in charities by seeking
information on, for example, the turnover of trustees, the number
of full trustee meetings, and the average attendance at
meetings.
Sir John Bourn said today:
"The Charity Commission has achieved much since the Public
Accounts Committee’s last report. There is scope for further action
by the Commission to improve the scrutiny of charity finances and
its oversight of the work of charitable
trustees."
Notes for Editors
The Public Accounts Committee has considered the work of the
Charity Commission on a number of occasions in recent years: in
1988, 1991 and 1998. On the last occasion the Committee made a
number of recommendations for improvement, such as: improving
management effectiveness; securing the timely submission of
accounts from charities; monitoring potential causes for concern;
and strengthening the support and investigation of charities.
In 2000-01 there were 185,000 or so charities registered with
the Charity Commission for England and Wales. These charities had
an estimated gross income of £25 billion (around 3 per cent of
UK Gross Domestic Product) and net assets of some £70 billion and
were managed by an estimated two million trustees of governing
bodies.
The Commission has statutory responsibility for promoting the
effective use of charitable resources. The Commission’s main
functions include maintaining a Register of Charities, monitoring
accounts and reports from the larger charities, providing advice
and support and investigating abuse and poor practices. In 2000-01,
it had an annual budget of some £21 million and employed
547 staff in its three offices, London, Taunton and
Liverpool.
In 2000-01, the Commission completed 212 full inquiries of which
191 were substantiated, registered around 6,000 new charities and
handled over 36,000 requests for advice and support.
Press notices and reports are available from the date of
publication on the NAO website at http://www.nao.org.uk/ Hard copies can
be obtained from The Stationery Office on 0845 702 3474.
The Comptroller and Auditor General, Sir John Bourn, is the head
of the National Audit Office employing some 750 staff. He and the
NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 47/01
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