Firstly, may I thank you for inviting me to speak to you tonight. Your organisation, including Wild Research, is a modern contribution to the long-standing work of charities in England and Wales. The Charitable Uses Act 1601 (otherwise known as the Statute of Elizabeth) originally established approach to charity in England and Wales and set-out the general parameters of what was charitable: including the provision of education, care for the sick and the advancement of religion.
The work of charities across our country and throughout the world can literally mean the difference between life and death for their beneficiaries.
Yet recent scandals in charities threaten to undermine this work and good governance is key to the long-time health of charity. It is crucial that charities invest in governance, with time as much as money.
Trustees make a vast contribution to society, but our regulatory work shows that too many of them rely on their passion for the cause, without fully understanding their duties. Even competent, active trustees sometimes face problems they cannot solve and contingency plans must be in place, particularly when vulnerable beneficiaries are concerned.
This is why I will focus on governance tonight. I will discuss what trustees, the commission and others do to improve the standard of stewardship in our charities.
Successive revelations and high-profile collapses have hit public trust in charities. The level of outrage at fundraising practices and the high-profile collapse of Kids Company, was so great due to the gulf between expectation and reality. Bernard Shaw defined indecency as ‘matter out of place’, and I think this helps explain at least part of the public disquiet. The public realised instinctively that the practices employed by some charities did not fit with the values of charity nor of philanthropy.
Now there is much work to do, both at the commission and particularly on governance, which I will turn to later. There are signs, however, that charities are taking steps to address public concern.
A new Fundraising Regulator is now being established by Lord Grade and has received the backing of most large charities. I hope all charities will embrace this last chance for self-regulation. It is in the best interest of charities to be make this work. Otherwise the commission will be required to regulate fundraising.
Some charities have announced independently, changes to their fundraising practices, for example ending door-to-door soliciting. These are serious decisions for trustees, not taken lightly – after all, they can involve the voluntary, if temporary, loss of income. It is therefore vital we are supportive when the need to change is acknowledged.
Last weekend saw a public apology from the new Chief Executive of the RSPCA. This came after public concern at the aggressive direction the charity appeared to have taken in recent years. He said he wanted their approach to be one of ‘dialogue and encouragement’.
We have been engaged with the RSPCA for several years. When any charity wishes to review any of its policies which have been criticised, we will support their efforts to restore public confidence in their organisation.
It can be, of course, the duty of a charity to tell the public some uncomfortable truths. At times, the greatest service a charity can render is the simple act of holding a mirror up to society.
I have spoken before of the work of Children’s Society founder, Edward Rudolf, who did much in the late 19th Century to alert the public to the issue of child welfare. Similarly, we hear daily charities bearing witness to the conditions endured by the homeless, the sick and the lonely. In such a way, charities inform and shape the constant moral debate about how we lead our lives and how society responds.
One of the founders of the RSPCA, William Wilberforce – a remarkable man who was also helped establish the RNLI – was so effective in another campaign because he did not simply try to overbear lawmakers and office-holders with rhetoric or sharp invective. His speeches were paeans of Christian philanthropy as he set out to reveal to British society the conditions of African slavery.
In our time, we too have the testimony of charities broadcast to us. Regularly we hear from charity workers of the plight of migrants across Europe, Africa and the Near East. Whatever may be the solution to this crisis, the efforts of charities to relieve suffering and alert the world to what is happening is essential.
Campaigning treads a fine line, of course. We have seen the damage charities can do to themselves if they push too hard. A few weeks ago, the Charity Commission issued guidance to help charities stay on the right side of this line in the referendum debate.
Some felt our guidance was too restrictive and threatened to deter charities from becoming involved. I regret this. Our aim was not to stifle legitimate contributions, rather to advise charities how they may contribute within the limits set by law. In response to some concerns, we adjusted this guidance to offer further clarity, and indeed is clearly states ‘there may be some circumstances in which it is appropriate for a charity to set out the pros and cons of a yes or no vote’.
If charities have other specific concerns, they are welcome to contact the commission. As was recently said at a conference to one of my colleagues, when questions arise, ‘run towards the regulator’.
The commission is always working to make its guidance for trustees as clear as possible. Under my chairmanship, and in response to critical reports from the NAO and Public Accounts Committee in 2013 soon after I started, the commission is transforming itself. We have become more robust, with five times more use of our regulatory powers last year than before I took over – this occasionally draws fire from charities. Most, however, understand that an effective regulator of charities is necessary for public trust and confidence.
Take our recent engagement with Age UK. Media reports detailed concern over its commercial relationship with an energy firm and the potential for misleading the charity’s beneficiaries. As well as scrutinising these arrangements, we also proactively identified 1,700 other charities with similar arrangements. These arrangements can bring in valuable income for good works but trustees must be sure they match the values of the charity. Such decisions are ultimately for trustees but it is our duty as a responsible regulator to highlight areas of potential concern. Age UK have responded to our engagement and I am hope they will continue their ongoing review and take the necessary steps to protect their reputation.
By reacting quickly, including through the new powers we are due to receive from the recently passed Charities Act, the commission can resolve individual issues, alert charities to danger and give the public confidence. The public and the taxpayer, after all, provide the gift aid and tax reliefs from which charities benefit.
To secure the future of the sector, governance must be the watchword of charities in the future and help is needed. Not least because there is a limit to what the commission can do. By law, and rightly in my view, we cannot order trustees how to run their charities. We are the policeman of charity, not the Stasi.
Nor does the commission have the resources. Our budget has reduced by 50% and our staff reduced from 600 to 300. To give you an idea of the scale of our work, we regulate £70 billion of charitable income every year – that’s getting on for 5% of GDP! That is £200 million regulated by each person at the commission. We are far smaller than other regulators and we must look elsewhere for support to drive improvements in governance.
I hope that foundations, umbrella bodies and others interested in the future of charity to champion the investment of time and resource in developing the quality of boards and the role of trustees. When making grants, for example, should there be a requirement that some of the new money is spent on governance and developing leadership?
I began by discussing how the Statute of Elizabeth formed the blue-print for the development of charity and wove it into our national life. From another great Elizabethan, whose death 400 years ago we are marking, these words should be held by charities, and by those of us who wish them well, as they continue their progress towards the restoration of public trust:
‘God bless thee; and put meekness in thy breast,
Love, charity, obedience, and true duty.’