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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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