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.