Public Accounts Committee brands the Charity Commission ‘not fit for purpose’

In its latest report, the Public Accounts Committee (PAC) has delivered another damning verdict on the performance of the Charity Commission, claiming it is ‘not fit for purpose’ which has resulted in a firm rejection of these findings from the Charity Commission.

In their report, the Committee accuse the Commission of ‘feeble’ performance, lacking any strategy and ultimately failing to regulate charities effectively.

The report goes even further than the National Audit Office (NAO) report from last December, which also criticised the Commission’s performance and concluded it was not regulating charities effectively.

At the time the PAC chair, Labour MP Margaret Hodge, suggested that the Commission might be abolished with its functions absorbed by HMRC, a threat which was not repeated in the latest report.

Mrs Hodge said: "We are dismayed by the fact that the Charity Commission is still performing poorly and failing to regulate the charity sector effectively. It is obvious that it has no coherent strategy and has been simply buffeted by external events.

"The Commission too willingly accepts what charities tell it when it is investigating alleged abuses. It too often fails to verify or challenge the claims made.

"Some of the most serious cases of abuse have not been properly investigated. It has been too slow in removing or suspending trustees and in pursuing investigations promptly – as demonstrated in its feeble investigation into the Cup Trust."

Responding, William Shawcross, Chairman of the Charity Commission, said: “I completely reject the suggestion that the Commission lacks a coherent strategy. We have already begun to implement the recommendations of the National Audit Office.

"I am confident that we are taking the Commission in the right direction. We recognise that we must strengthen our approach to identifying and tackling the most serious abuses of charity – and we have asked for new powers to enable us to do this. We also have to ensure that the few cases of serious mismanagement and abuse do not undermine public trust and confidence in charities more widely. It is a shame the Committee hasn’t recognised this progress.”

Mr Shawcross added that the Charity Commission has accepted and is already implementing many of the recommendations set out in the Public Accounts Committee report published recently.

The Commission is opening more statutory inquiries into charities and using its legal enforcement powers more, as was recognised by the NAO. For example, it now routinely uses its powers immediately to gather information during statutory inquiries, rather than asking trustees to volunteer information in the first instance.

The Commission confirms that it has:

  • Opened 48 inquiries since 1 April 2013; during the previous financial year (April 2012- March 2013) it opened 15 inquiries
  • Used its legal enforcement powers 657 times in statutory inquiries and operational compliance cases since 1 April 2013. The figure for the previous financial year was 216.

The Commission has been clear that its enforcement powers are insufficient and has welcomed the Cabinet Office consultation to extend and strengthen its legal powers, for example by giving the Commission a discretionary power of disqualification to prevent trustees from resigning to avoid removal.

The regulator is hopeful that Parliament will grant these powers, which will strengthen and speed up its most serious investigations into charities.

Other changes made since the NAO reported in 2013 include a major increase in the Commission’s programme of scrutinising and reviewing charities accounts: in 2012-13, the Commission analysed 5% of the sets of charity accounts received.

For more information on the Charity Commission and its powers, please contact us.

Posted in Charity News.