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Follow-up on the Charity Commission

The National Audit Office, in a follow-up to its December 2013 report on the regulatory effectiveness of the Charity Commission, has today found that the Commission has made good, early progress in addressing all NAO and Public Accounts Committee recommendations and developed a credible change programme. However, much hard work and significant challenges lie ahead.

This early review of the Commission’s progress found it has developed a new business model which focuses more of its resources on high-risk cases and aims to automate low-risk transactions. Under its new Chief Executive, the Commission has also begun a three-year ‘change programme’ which aims to transform it into a rigorous and proactive regulator, underpinned by £8 million of additional one-off funding from the Treasury. The programme is in its early stages although key aspects of good programme management are in place.

Today’s report found the Commission is making more effective use of its powers. In 2013-14 it opened 64 statutory inquiries (its most serious form of regulatory action) compared to 15 the year before. These inquiries have led to £47 million of charitable funds being accounted for. The Commission used its information gathering powers 652 times in 2013-14, compared to 200 times in 2012-13, and its enforcement powers 56 times in 2013-14, compared to 3 times in the previous year. Use of these powers in investigations completed in 2013-14 has protected £31.3m of charitable assets, including the recovery through litigation of £1 million for charities.

The Commission is making better use of data, for example by matching its data against the National Fraud Database. It also plans to cross-check registered charities with charities claiming gift aid. However, the Commission shares twice as much information with other public authorities as it receives. The NAO recommends that the Commission persuade public authorities to share more information with it.

The Commission is updating its approach to assessing regulatory risk, and is building its skills and capability through the recruitment of senior staff and board members with experience in fields such as fraud prevention, counter-terrorism and operations, although it currently lacks a board member with expertise in IT.

According to today’s report, the Commission has more to do to understand the unit costs of its new regulatory model, and it has not yet quantified the relative benefits of different activities, limiting its ability to take informed decisions about where best to direct its resources.

It has improved its follow-up checks of what trustees tell it, although the Commission still does not follow up on all the issues the NAO might expect it to. The NAO found cases where

the Commission had not checked before closing the cases whether trustees had complied with its instructions.

The NAO also notes that the Commission is taking longer to register charities, resulting in the build-up of a backlog of applications. The Commission aims to clear the backlog by the end of January.

 

 

 

 

 

 

 

“The Commission is working to address the recent recommendations made by the Public Accounts Committee and the NAO. It has clearly stated its intent to become a robust regulator. It now needs to deliver on its intent, and there is still much to do. This includes building on its positive first steps to regulate more actively, as well as developing a better understanding of its future costs and the resources it needs from HMT. Furthermore, the Commission needs to show stakeholders how its new approach is enabling it to regulate the sector more effectively, and to make clear what the sector and the public can expect from it.”

Amyas Morse, head of the National Audit Office

Notes for Editors

£21.1m

Annual budget of the Charity Commission in 2014-15

164,000

Main registered charities in England and Wales overseen by the Charity Commission

64

Statutory inquiries into charities opened by the Commission in 2013-14

652

Times the Charity Commission used its information gathering powers in 2013-14 (200 in 2012-13)

56

Times the Charity Commission used its enforcement powers in 2013-14 (3 in 2012-13)

1

Trustee removed in 2013-14 (0 in 2012-13)

£8 million

Additional funding secured for the Charity Commission's 3-year transformation programme

1,746

Exchanges of information between the Charity Commission and other public bodies in 2013-14 (1,539 in 2012-13)

1. In December 2013, the National Audit Office published a report entitled The Regulatory Effectiveness of the Charity Commission, which concluded the Commission was not regulating charities effectively and was not delivering value for money.

2. The Charity Commission regulates charities in England and Wales. It is an independent, non-ministerial department responsible for regulating more than 164,000 registered charities.

3. Press notices and reports are available from the date of publication on the NAO website, which is at www.nao.org.uk. Hard copies can be obtained by using the relevant links on our website.

4. The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Amyas Morse, is an Officer of the House of Commons and leads the NAO, which employs some 820 employees. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services, and our work led to audited savings of £1.1 billion in 2013.

Contact

NAO Press Office
+44 (0)20 7798 7400 or email pressoffice@nao.org.uk

PN: 08/15