The Regulator for Charities in England and Wales

Progress by the Commission on recommendations not requiring legislation

June 2006

Many of the recommendations in the Strategy Unit Report 'Private Action, Public Benefit' published in September 2002 were taken forward without legislation. This report outlines how the Charity Commission has implemented recommendations for the organisation.

Reforming the legal framework: a modern approach to charities focusing on public benefit

Recommendation 2 : The Charity Commission should undertake on-going checks on the public character of charities.

  • Following the mention of the Bill in the Queen's Speech on 17 May 2005 the Bill was reintroduced into Parliament on 18 May. As the final provisions of the Bill become clearer we will decide how best to develop our guidance for charities on public character (now called public benefit in the legislation), including the criteria which affect it. We will issue the revised version for consultation to make sure the explanation is clear. For further details see Public benefit checks - how will we carry them out?

Recommendation 4 : That the Charity Commission guidelines on campaigning should be revised so that the tone is less cautionary and puts greater emphasis on the campaigning and other non-party political activities that charities can undertake.

  • We had a number of discussions with charities on campaigning and, in November 2003, held a focus group discussion with sector representatives. We consulted on revisions to our guidelines and after analysing the results we published revised guidelines in September 2004.
  • At the same time we revised and clarified our guidance on the promotion of human rights as a charitable purpose and issued it for consultation in June 2004. The extended consultation period closed in mid October. We published the revised guidance RR12: The Promotion of Human Rights -in January 2005.

Reforming the legal framework: a range of legal forms enabling charities and other not-for-profit organisations to thrive

Recommendation 5 : That the Charity Commission should provide specific advice to facilitate mergers, possibly by creating a dedicated internal unit.

Building public trust and confidence and supporting the sector in improving performance

Recommendation 18 : As part of their Report and Accounts, the largest charities (those over the proposed new £1m audit threshold) should complete an annual Standard Information Return (SIR).

  • We established a group, which included a range of external sector representatives and members of our staff, to inform development of the SIR. Working jointly with the NCVO we commissioned research on this issue followed by a seminar in January 2004.
  • We issued a pilot SIR for consultation in May 2004 and invited 183 charities to complete it. We also publicly consulted on our proposals, with consultation closing at the end of July 2004. We analysed the results of the pilot exercise and consultation responses and held further discussions with sector representatives.
  • In the light of the response to our proposals the full name of the SIR is now be the Summary Information Return.
  • The SIR was included in the Commission's Annual Return from 1 April 2005.
  • All charities with an income of £1m or more are required to complete an SIR from the reporting year 2004/5 onwards.

Recommendations on use of SORP (Statement of Recommended Practice for charity accounts) to make charities more transparent and accountable.

Recommendation 19 : Develop improved methods for apportioning costs and expenditure, enabling more meaningful financial comparisons between organisations to be made

  • Additional guidance on cost apportionment (particularly in relation to fundraising) has been included in the revised SORP 2005 (PDF 674kb) issued on 4 March 2005.

Recommendation 20 : Improve SORP to strengthen its focus on achievements against objectives, organisational impact and future strategy

  • SORP 2005 provides for a restructured Trustees Annual Report that creates a clear link between a charity's aims, objectives, activities undertaken and results achieved which may include organisational impact. There is also a new section setting out the key objectives for the next reporting period. See above for link to SORP 2005.

Recommendation 22 : Smaller charities with significant holdings of equities should make a declaration of their ethical investment stance on a voluntary basis

  • This recommendation has also been included in the SORP 2005. See above.

Recommendation 23 : The ability of charities to follow a broad ethical investment policy should be clarified.

Recommendation 30 (intended to address problems relating to bogus fundraising):

The liaison arrangements already in place between the Charity Commission, local authorities and the police should be strengthened by means of protocols setting out agreements on joint working.

  • We are reviewing our liaison and working relationships with the law enforcement agencies and other regulators which may be concerned with the misuse of charitable funds, which includes fundraising abuse. We aim to produce memoranda of understanding with these bodies which will lead to better collection and exchanges of information and evidence.
  • We continue to improve liaison with local groups including the licensing departments of individual local authorities. We now have designated Single Points of Contact within the Commission to answer Licensing Officers' queries on charity and fundraising issues. Charity Commission officers attend Regional Licensing Officers Groups to update the members on charity issues and points of concern. Commission officers belong to Regional Fraud Forums to exchange best practice with Local Government officials in counteracting fraud. We have built up a database of contact details for all local authority licensing officers. Recent initiatives include a 'Give with Confidence' campaign in conjunction with Pub Watch Groups in the South West Region.

Recommendation 34 : The SORP should provide for annual reports to include a statement of procedures for recruitment, induction and training of new trustees.

  • This recommendation has been included in SORP 2005. See above for link full document.

Ensuring independent, open and proportionate regulation

Recommendation 38 : Indicators should be developed by the regulator, in consultation with interested parties, to allow its performance against its objectives, and its impact on the charitable sector, to be judged.

  • The Commission has reassessed its framework in which we measure our performance. The revised framework reflects the proposed statutory objectives for the Charity Commission, and emphasises our regulatory impact for the sector and the outcomes we achieve. Our new key performance indicators were published in our Corporate Plan 2006-08 (PDF 351kb) on our website in April 2006 after consultation with HM Treasury .

Recommendation 41 : The Charity Commission should open its Board meetings to the general public.

  • Since September 2004 we have held bi-monthly open Board meetings either in London or the regions. Our first open AGM was held in September 2005 in London.
  • Agendas, papers and minutes for open Board meetings are published on our website. In line with both the Strategy Unit recommendation and the Government's response some business will be reserved if there are good reasons for doing so.

Recommendation 42 : The Charity Commission should develop a better focus on the needs of stakeholders other than the regulated constituency by:

- providing advice on giving aimed at potential donors;
- making standard information about the largest charities available on its web-site; and
- signposting on its website other appropriate bodies that members of the public should contact if they wish to complain about a particular aspect of a charity's work or mode of conduct.

  • Standard information about the largest charities will be collected by the Summary Information Return (see recommendation 18). We have published the submitted accounts of 35,000 charities online as well as the governing documents of the 300 largest charities.
  • Our website was relaunched in October 2003 and now includes links to other bodies. We are currently developing a customer service web page which will include advice for those with complaints against charities which will also include appropriate signposting links.
  • We worked with Philanthropy UK to help potential donors who want to create foundations through which to give to charity. This was published in October 2003 and is available at www.philanthropyUK.org. We have also agreed a streamlined approach to registering this type of charity.

Recommendation 43 : The Commission should seek to separate the process of judging whether or not an applicant is a charity from that of assessing viability.

  • We continue to develop the pack used by those applying for registration with greater emphasis on the criteria for charitable status. We will continue to offer advice on governance and viability issues including options for working with other organisations. We are also working towards the introduction of a simple, user friendly on-line application process. New registration packs, post enactment of the Bill will also address this recommendation.

Recommendation 47 : The Charity Commission should review, with sector participation, and report on the performance of different charitable sub-sectors with a view to correcting information failures and enabling stakeholders to maximise beneficiaries' interests and better fulfil underlying charitable objects.

  • This work is now tied in with the Commission's forthcoming statutory objectives to promote the effective use of charitable resources and to enhance the accountability of charities. This is likely to be taken forward alongside other plans for working with different sub sectors. Performance information will also be more accessible to stakeholders under the new accounting Statement of Recommended Practice (SORP) and as information comes in via the new Summary Information Return (SIR).

Recommendation 50 : The Charity Commission should open an office in Wales.

  • In November 2003 we announced we would open our first Welsh office in Newport, and the office formally opened on 1 April 2004. Further details and reaction can be found via our Press Releases.

Recommendation 51 : A new umbrella committee, on which all UK charity regulators are represented, should be created, to ensure a consistent regulatory approach UK-wide and to share information and best practice.

  • The first meeting of the UK charity regulators was held on 2 October 2006. It also included representation from the Republic of Ireland. Northern Ireland and the Republic of Ireland are in the process of establishing bodies to regulate charities.  They were represented at the meeting by officials responsible for this work.  The group will meet twice a year.

Recommendation 52 : Alongside Charity Appeals Tribunal, we will introduce a streamlined single stage internal review procedure

  • After initial work on how we could improve our procedures we will take this forward in more detail alongside development of the Tribunal.

Recommendation 61 : The Charity Commission, with advice from the Cabinet Office's Regulatory Impact Unit, should quantify the impact of regulation on charities and other not-for-profit organisations, monitor it over time, publish the results and highlight areas where regulation appears excessive.

  • As part of its 2005 programme of work the Better Regulation Commission, then named the Better Regulation Task Force, took this recommendation forward in a review of the regulatory environment for the charitable sector. This report was published in November 2005 as Better Regulation for Civil Society.
  • The Better Regulation Executive is currently working with all government departments and regulators to measure and then set targets for reducing the administrative burden of organisations which are regulated, including charities.