Stronger Charities for a Stronger Society
Earlier this year, the UKParliament published a report that emphasised the vital role the charity sector plays in British society, praising the work of the majority of charities and confirming public trust in the sector. The House of Lords Select Committee commented, “Charities are the eyes, ears and conscience of society. They mobilise, they provide, they inspire, they advocate and they unite. From small local organisations run entirely by volunteers to major global organisations with turnover in the hundreds of millions, their work touches almost every facet of British civic life.”
The report confirms what we in the sector know: that charities are often the frontline of support for the most vulnerable people in society and are therefore in the best place to assess their needs. Charities not only provide; they inspire and innovate, and through their advocacy help shape laws, government policies and society as a whole.
The report does, however highlight governance challenges that the charity sector faces – with a particular focus on economic, social and technological changes – and makes wide-ranging recommendations for both non-profits organisations and for the UK Government.
We are living in a time of profound economic, social and technological change, and the environment in which charities operate is altering dramatically. These changes have posed new challenges for charities, resulted in a small number of high-profile failures, and leading to greater scrutiny on the sector than ever before. However, the overwhelming majority of charities continue to do excellent work and trust in the sector fundamentally remains strong.
The UK’s withdrawal from the European Union is bound to have an impact on the charity sector, with estimates that the sector receives around £200m a year from the EU, primarily through the European Social Fund. The Office for Civil Society should undertake an audit of the potential impact of Brexit on charities and brings forward proposals to address any negative effects.
What does the report recommend?
Among the 100+ conclusions and recommendations made in the report, there are some that jump out as positive and worthy of government action:
Improve governance and accountability
- Charities should regularly undertake skills audits of their trustee boards
- The government should take measures to get more senior business leaders directly involved with charities
Board diversity and turnover
- There should be a time limit for individuals to serve as trustees and a maximum term of office (except for family foundations)
- Charities should regularly review the operation of their boards and the tenure of their trustees and chair (annually for large charities)
Transparency, accountability and impact
- All charities should be seeking independent evaluation of their impact and The Office for Civil Society (OCS) should develop guidance on how to set up contractual impact reporting
- Charities should provide regular information to stakeholders that enables them to measure its success
Funding: Grants, contracts and commissioning process
- The sustainability of organisations should be considered when awarding Payment by Results contracts
- Services should be commissioned over a longer period whenever possible so charities can plan for the future
- Given that the new Fundraising Regulator has only recently been established, no further changes are proposed to the regulatory landscape
Charities and digital technology
- Charites should embrace digital technology and actively consider including a digital trustee role on their boards
- Infrastructure bodies should share knowledge and best practice on innovation and digitisation and co-ordinate training opportunities
Alternative forms of charity finance
- The Government’s focus on Social Impact Bonds has been disproportionate to their potential impact
- Future public funding should be reoriented towards financial products with application to a wider range of charities and beneficiaries
Devolution, compacts and engagement within the sector
- The Government should review its approach to engagement with the charity sector before policy announcements are made, with a view to ensuring that charities feel better informed
- Central Government needs to understand better, and take account of, the implications of devolution for charities and civil society. There needs to be a proper dialogue between charities and new regional administrations at every stage of the devolution process, and voluntary sector representatives should be involved in leadership structures and decision-making where appropriate
Brexit’s impact on charities
- The Office for Civil Society should undertake an audit of the potential impact of Brexit on charities which should include the impact of loss of funding as well as on research collaboration (by the end of 2017)
- It is estimated that charities receive around £200 million from the EU each year
Regulation in the charity sector
- The Charity Commission should make clear that those charities which are proactive in reporting issues to them will be supported to help put things right
- Concern is expressed about the Charity Commission proceeding with any proposal to charge charities. It should make clear how a charge would benefit charities and strengthen the sector overall
I think we should take heart from this report and its recommendations. The last year has seen charities in the headlines for all the wrong reasons, such as errors in leadership and poor fundraising practices. The Committee's recommendations cover a wide range of areas and it is not yet known which, if any, the Government will accept. Nonetheless, running through the report is a reassuring thread of respect for charities, together with a desire to support their work.