Trust is built into the legislation that governs the work of the Charity Commission, which has a statutory objective to increase public trust and confidence in charities.
“Our role is not merely about maintaining trust and confidence in charities,” says Paul Latham, Director of Communications and Policy at the Charity Commission. “It's about increasing trust. That is a really important driver for us as a regulator and our strategic purpose as an organisation is to ensure that charities can thrive and inspire trust so that people can improve lives and strengthen society.”
He continues: “Trust is baked into both the legislation and into our strategic intent. It’s core to what we do.”
If the public does not trust that the charities to which they offer their donations of money, time and effort, and if charities are not accountable, transparent and do what they say they will do, then charities individually and the charity sector as a whole can't achieve its maximum benefit for society, he points out.
“That’s where we see our role,” says Latham. “We represent the public interest in charity and helping to support the charitable sector to have the greatest impact.”
To support its work, the Charity Commission has undertaken extensive research into matters of trust, identifying a dip in trust in the charity sector a few years ago coinciding with scandals involving several household name charities. This measure has since begun to recover, in a period when the Commission’s regulatory action has been very visible.
“There are somewhere around 170,000 charities in England and Wales on our register – that is a large population to regulate,” says Latham. “The vast majority of those are doing good work, right across the country, in a huge variety of areas of focus and sectors.”
The Charity Commission’s research reveals that, although the public has quite diverse views about charities, some things are pretty much universally believed to be vital. One of these universal imperatives is that charities should be transparent about where the money goes. Another is that charities should remain true to their values, and this means not just the results of charitable activity but also how they achieve their outcomes.
“We also know that the public consistently expects charities to be efficient in how they make use of their resources,” says Latham. “They expect charities to be well-governed and well managed. And they also think that charities need to be able to demonstrate how they make a difference, not simply asserting this impact but showing that they are making a positive difference.”
As for the impact of charities during the pandemic, the true picture will take months, perhaps even years to emerge, but it is certainly clear, says Latham, that Covid has made charities more visible. “We’ve been reminded just how much we rely on charities, particularly when times are hard. We’ve also seen this twin effect of some charities seeing demand go through the roof for their services while some other charities have had to close their doors,” he says.
“As the country gets back on its feet, charities are going to be central to the recovery. That will emphasise further the importance of charities focusing on public expectations.” It will also focus attention on the Charity Commission in its role as regulator.
But the role of the regulator is also to show it has teeth and to involve itself in difficult cases. “It's certainly important that the public can see that there is a regulator that's active on its behalf,” he says. “We also take the view that as well as holding individual charities to account against the charity law framework, we give voice to the public interest, not solely around the letter of the law, but also where behaviour falls short of what the public would reasonably expect from charities.”
Further, the Charity Commission is not just about tackling wrongdoing: it is also about helping charities to do the right thing, with the vast majority of the charity sector replete with good work from good people for no financial reward. “It’s a really important part of our work to reach out to charities and help them to get it right,” says Latham. To this end, the Charity Commission is extending its suite of guidance and actively getting it in front of the charities it regulates.
And let’s keep in mind that being a trustee or being part of a charity leadership team is a difficult job. “We, as the regulator, and the courts are alive to the fact that trustees who are accountable and responsible for charities’ actions and decisions are, generally speaking, doing it very much on a voluntary basis. But alongside that, the public has reasonable expectations that charities are well run and held to account against a framework. There's an important balance there. The public's expectation is that there should be a strong regulator that ensures trust continues,” he points out.
Finally, there is a vital role for chartered accountants in helping charities to deliver clear, accurate and compelling accounts, and also to support trustees in making good decisions.
Designed for finance professionals who engage with the charity and voluntary sector, ICAEW’s Charity Community is open to everyone, including non-ICAEW members.