If you want to make statements about “charities” stick to what they have in common

The Charity Commission claims that its recent Statement of Strategic Intent represents the very first time the Commission has acknowledged that regulation is not an end in itself. 

I do not, however, recall any previous Board saying or implying: “We must pursue regulation for regulation’s sake!” On the contrary, the strategic aim has long been to promote public trust and confidence in charities because Parliament has decided that specified causes are charitable and for the public benefit. That is not regulation for regulation’s sake, but for the sake of benefitting the public.

For example, after 2006 the Charity Commission spent a lot of time and effort trying to “help maximise the benefit that charity [I think she means charities] provide[s] in our society”, as the current Chief Executive puts it, by providing, as instructed by Parliament, comprehensive guidance on how charities can and must benefit the public, what that really means, and how they should define, assess and report on the benefits they offer in a manner consistent with charity case law. The overall guidance has the merit of being common to all charities, in all their diversity, and it was supplemented by more detailed guidance for key sectors including education and religion. I can assure the current Commission that we were doing this, not as regulation as an end in itself, but for the public benefit – and for the sake of strengthening the long term bargain between charities and the rest of society.

By contrast, the Charity Commission’s new Statement of Strategic Intent, and surrounding speeches and articles by its Chair and Chief Executive, give central place not to public benefit or charity law, but to the need for charities (in general, apparently) to change their culture and behaviour in order to exhibit charitable ethos and attitudes such as “the public” expect. I argued in a recent blog that this prospectus is marred by vagueness:

https://andrewpurkis.wordpress.com/2018/11/13/the-charity-commissions-job-relates-to-charities-not-charity/

Let us now look at what actual examples of “charitable attitudes and ethos” the Chair or Chief Executive have given: their best efforts to explain what they actually mean. They are finding it difficult to generalise.

They correctly say that important lessons must be learned from the minority of charities responsible for bad fundraising practices and from inadequate approaches to safeguarding. That does indeed require culture change (among other things), with more consistent respect for donors as human beings, and better safeguarding policies and Codes of Conduct that are taken seriously at every level, now that the consequences of unequal power relationships and patriarchy are understood better within and beyond the workplace. I gladly pay tribute to the part played by the Fundraising Regulator and Charity Commission respectively in assisting such changes. OK, but what else?

After that, the examples offered by the Chair have run into heavy flak. Charities, we are told, should not prioritise their own organisational growth above the long term interests of their beneficiaries. Agreed, they should not prioritise anything at all above those interests, but it is far from simple to judge in any particular case whether the beneficiaries gain more from the growth of a good charity than they would if that charity chose not to grow. The Charity Commission is not the right body to make that judgement.  The Chair cites one charity that decided not to tender for a commissioning contract because other charities might be damaged and beneficiaries might suffer in the long run. Great – but that might be the right decision for beneficiaries  in one case, the wrong one in another. It is not a general example of the behaviour that people expect from charities.  Indeed, giving smaller charities a better chance in commissioning processes is mainly about changing the processes, not charitable ethos. Perhaps charities should also be less like businesses, she suggests, but this is another vague generalisation when charities are so diverse and some of them definitely need to be more business-like, learning from the commercial world and applying relevant insights to their own distinctive purposes. (Thanks to sundry Twitterati who have made these points).

In short, when it comes to explaining what they mean by their strong emphasis on changing culture and behaviour in favour of charitable attitudes, charitable ethos and charitable behaviour,  the cupboard is so far strikingly bare. In a future blog I shall suggest that the Commission’s focus group research does little to help stock the cupboard.

The Commission’s key problem here is that it is genuinely difficult to generalise accurately about 168,000 totally diverse charities. That enormous sector might say with Walt Whitman: “Do I contradict myself? Very well, then I contradict myself. I am large, I contain multitudes”. The Charity Commission knows more about that diversity than any other body.

It is nevertheless possible to make generalisations about them if they are based on charity law and public benefit, because charitable status and charity law is common to them all, and them alone. It is possible to make generalisations about their independence, because by definition they must all be independent, and about the salience of volunteer effort (including volunteer Trustees) and money freely given by donors, since those are distinctive characteristics of the vast majority of charities even if shared with other voluntary organisations, too. Those things are common to the entire diverse crowd.  It is, however, perilously difficult, if not impossible, to make useful generalisations about their behaviour, attitudes and ethos because you are comparing most charities that have no staff with the minority that do, a football club with the Royal Albert Hall, local mosques with The British Council, a posh fee-paying school with a self help group for Somali immigrants, the Wellcome Trust with a hedgehog preservation society. Trying to find ethical principles to suit all that lot leads to a very high level of “apple pie” generality with limited purchase on real decisions in real life. This is why the NCVO has experienced major difficulties trying to come up  with a Code or Statement of Ethics for Charities (see my blog Doubts About the NCVO’s draft Code of Ethics) : the Charity Commission is not alone in its struggles.

The vagueness of the Commission’s Statement of Strategic Intent and accompanying communications seems to be the result of, apparently, sailing away from a primary emphasis on the things that define all charities, and therefore from the Commission’s heartland of authority and expertise. As they head into the mists of “charity” (instead of “charities”), ethics, attitudes, culture, and behaviour, the clarity of the Regulator’s messaging tends to dissolve as the visibility deteriorates.

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The Charity Commission’s job relates to charities, not charity.

The Charity Commission’s recent Statement of Strategic Intent, and surrounding speeches by its Chair Baroness Stowell and a recent article by Chief Executive Helen Stephenson (“Public Attitudes to charity – and why they matter” – Civil Society News 5 November 2018) are marred by vagueness tinged with moralism.

There are good things about the Statement. It has a positive vision and ambition for a thriving sector. The oversimplified emphasis of the Shawcross years on the “policeman” role of the Commission has been jettisoned. Prevention, and proactive partnership to improve standards, are back. And the strategy itself is yet to come, so there is plenty of scope for clarification. In principle, an element of honest challenge to the sector is welcome. For now, however, these positive intentions are partly lost in the mist.

Take the key Statement of Purpose: “The Charity Commission ensures charity can thrive and inspire trust so that people can improve lives and strengthen society”. Charity with a small c, however, is the quality of kindness and benevolence, tolerance in judging others, and love of ones fellow human beings. It is not the job of the Charity Commission to be custodians of that quality in society. Charity with a small c manifests itself in all sectors of society, not least in our public services, and in countless every day interactions between people which have nothing to do with being a registered charity. The Charity Commission’s job relates to charities, not charity.

This is not just a one-off piece of imprecise drafting: the thinking itself is imprecise. A key message of the Statement is that it is no longer enough to achieve a “worthy”  purpose, by which they mean a charitable purpose as defined by Parliament and interpreted by the courts. “A charity must also be a living example of charitable attitudes and charitable behaviour,” says the Statement. “Charities must change their culture and behaviour”, the Chair tells us (speech at RSA, 5 October 2018). Note that this was not framed as a minority of charities, or some charities: it’s charities in general. “People” feel, she adds, that the promise of charity has not always been kept….charities are not always motivated by the same sense of decency, concern and selflessness which drives them when they donate.” All charities, in a nutshell, must abide by “the attitude, the ethos the public expect”.

The problem with these and other similar formulations is that:

  • what constitutes “charitable behaviour”, “charitable attitudes and ethos” is vague
  • what “people”, “the people” or “the public” know about charities and expect is also vague
  • generalisations about charities are vague.

For example, what does the Commission actually mean by “charitable attitudes” and “charitable behaviour”, concepts which are commonly used in relation to individuals? We all understand what “generous” and “caring” individuals are, but even for individuals some concepts cited by the Chair are imprecise or even wrong. We could argue for some time over what “a sense of decency” is. It doesn’t make for clear guidance. And “selflessness” is more problematic. If you love your neighbour as yourself, you are not being selfless. You are not loving your neighbour instead of yourself. Successful volunteering, for example, involves a strong element of reciprocity: the person or organisation being assisted benefits, but so does the volunteer. People fulfil themselves and achieve satisfaction for themselves in loving interactions with their fellow human beings.

Hence, motives for giving money to charity may also be complex: a sense of being judged by your peers (or, if you believe in God, by God), a sense of guilt, a sense of social status, a sense of satisfaction at making a difference, a warm glow from the gratitude of the recipient, your name on the back of a chair, a sense that you yourself might be next in line needing help: all these may be part of the mix, which is not properly described as selflessness. As one of the Commission’s Manchester focus groups correctly put it, “I think it makes  people feel good as well if they’re contributing in some way.”

All right, I admit that Thought for the Day is not my forte, but I do doubt if it is Baroness Stowell’s either – or her job as Chair of the Charity Commission.

This is tricky territory for Bishops, let alone Charity Commission Board members. As Bishop Geoffrey Paul once said: “There is no way of belonging to Jesus Christ except by belonging gladly and irrevocably to the glorious ragbag of saints and fatheads who make up the One Holy Catholic Church”. The wider charity sector of which the Church is part is much the same. Ever since Anthony Trollope, Charles Dickens and later C.P. Snow,  charities of all shapes and sizes have had a decent share of egotistical Founders, great campaigners who are personal bullies, self-righteous prigs, people who confuse themselves with the cause, zealots with tunnel vision, people who take a most uncharitable view of others who disagree with them, in short, a glorious ragbag of saints and fatheads. Don’t expect that to change too much so long as people remain human with feet of clay.

If “charitable attitudes and behaviour” are not so easy to pin down or change for individuals, they are more difficult still to define for whole organisations. What does it mean for, say, the Ramblers Association (chosen totally at random), to be as an organisation generous, caring or tolerant in judging others (common meanings of the word “charitable”), including landowners who block footpaths? I love the Ramblers but I really don’t know. The Charity Commission is struggling to define what they mean when they say that charities (in general) have to change their culture and behaviour to be more charitable. In my next blog I shall look at the examples they have so far given and the focus group research to back them up. Spoiler alert: those efforts are not going very far yet in penetrating the mist.

There was a Charity Commission Legal Board Member who used to go around in the 1980s saying (of supposedly unacceptable political activity by charities): “It is like the elephant: difficult to describe, but you know it when you see it” – which did not strike us at the time as very useful guidance. As the Commission’s new strategy is developed, let us hope for more rigour and clarity.

 

How Are Leading Charities to “Give People Power”?

Is it right to expect leading civil society organisations to do more to empower local communities, combat alienation and model participatory democracy as an antidote?

This was the challenge, as I understood it, laid down by Julia Unwin, Chair of Civil Society Futures, in her Civil Society News “Voices” article of 14 August. Julia was concerned to address the gross centralisation of decision making in our system of Government (hear, hear!), but also challenged leading civil society organisations, if they wish to rejuvenate their jaded sector, to show Government how a more empowering and participative approach should be done. She clearly implied that they were not doing this well enough at present, and “almost all” of them were “almost” completely absent from the communities consulted by the Civil Society Futures programme.

My immediate reaction was “Yay!!” This was not just because I have great respect for Julia and the Civil Society Futures initiative, but also because this is the emotional heartbeat and theory of change of the international development charity of which I am a proud International Board member, ActionAid International. We believe in empowering communities to assert their rights and challenge unequal power relationships of all kinds, including gender relations, discrimination against caste or ethnic groups, and unaccountable power elites in government or Corporations. We believe in people power. The typical ActionAid posture is sitting in a circle on the ground with people from social movements of the poor or oppressed, listening to them and facilitating them to discover in themselves the seeds of people power, and then to define and assert their priority demands. This empowerment, rooted in local communities, is then reinforced by helping them to link with other similar groups in the district, region, nationally and internationally, to influence the decisions at those levels that affect their life chances. Women’s rights are absolutely key to all this. We believe that in the long run we cannot eliminate poverty and social injustice without challenging malevolent power structures.

After that initial warm gush of affirmation, however, I have found myself trying to think harder about Julia’s challenge, and trying to make some distinctions.

For leading civil society organisations differ widely. Some are centralised monoliths, but many are not. Take the religious ones. What about the Church of England? Whatever its weaknesses, it is present in every parish, it has hundeds of thousands of active adherents and is in so many places a nursery of participation, volunteering  and community. The governance is a mixture, but local churches are independent charities and elect their PCC (the Trustees) and there are Synods at deanery, Diocesan and national level to determine policy, with extensive powers for elected clergy and laity. I don’t understand how this leading organisation fits into Julia’s picture of absentee charities failing to impinge on local alienation. This is only one example. There are of course many other Christian denominations, some more democratic, some less, plus all the other faith communities. Love them or loathe them, they offer participation, a sense of agency, relief from loneliness or neglect, and facilities where community bonds can be formed; and many decisions affecting them are typically taken locally.

The broader point is that many charities with a leading national profile have local branches, which may be local charities in their own right as well as part of a national network. Of the secular variety, think of Women’s Institutes, Age Concern, Citizens’ Advice Bureaux, The Ramblers’ Association, Girlguiding and The Scouts, MIND, MENCAP and so forth. Were they and their religious counterparts really all “almost completely absent”? Or were they present but not relevant enough to combatting alienation? Do their users and members continue to feel  as alienated as before, or is it those whom they don’t reach? Again, some of these organisations (such as the Ramblers) are highly democratic in their governance structures, others less so. So what is it exactly that they are being challenged to be or do – Be more present in more places? Be more democratic or participative in their own internal structures? Be more consultative in the way they consult actual or potential users and beneficiaries in making decisions about their priorities? We need clarity as to what the challenge is, and to whom.

Bear in mind, too, that “communities” are not only geographical. There  are also communities of interest, communities of shared enthusiasm, communities of special need, communities of belief, and the reason for existence for many charities is to serve these. I do not know to what extent Civil Society Futures intend to consult these communities, as well as geographical ones, or whether the findings would be any different. The fact is, however, that it isn’t the purpose of many kinds of charity to mitigate the alienation of geographical communities or promote democracy. It might be to engage in medical research, or protect the heritage, or assist sufferers from a specific disease and their families, or a thousand other causes. The Trustees of those charities should surely be considering a more participative and democratic methodology only in so far as their theory of change suggests that this will be the very best way of securing their charitable objectives? For some it really might. For others, perhaps not.

Similarly, feelings of alienation, powerlessness and lack of control also have varied causes and components. Julia’s article does not mention that women in particular tend to feel alienation and powerlessness as a result of patriarchy in our society. That brings a whole series of crucial challenges for the sector, (and wider society) that are not about being more consultative or participatory in a general sense; they are more specifically about rooting out entrenched cultural biases and embracing policies to promote women’s rights, safety, confidence, participation and expectations.

To take a quite different example, there are few things more likely to induce a sense of powerlessness than the awareness that our whole planet may be going down the celestial toilet as a result of global warming. Two of our leading civil society organisations in the environmental field try to address this in different ways. Friends of the Earth is structured around local groups and a democratic governance, feeding into an important national and international presence. Greenpeace takes on the unaccountable global Goliaths of environmental destruction through much more centralised decision making, galvanising support and awareness through mighty media campaigns. Either organisation can give us supporters the feeling that at least we can do something to help. So what is Civil Society Futures now challenging them to differently, and why? Is the same challenge equally valid for two organisations with such different USPs and structures?

At another level, if I am a sufferer from a disability or chronic disease, the greatest contribution to my sense of being in control might be from the charity that links me to other sufferers and their experience of managing, and to specialist online resources, aids to daily living or more appropriate housing. If I am a cancer patient, my number one requirement to feel more in control of my destiny may be, simply, to have the cancer cured or knocked back, (perhaps as a result of research funded by Cancer Research UK, one of the leading bodies named by Julia Unwin) or, if not, to be helped to manage. If I am a care leaver who feels nobody gives a damn about me, the charity that can give me back a sense of hope, worth, agency and control may be a children’s charity that assigns a key worker to me for the long term, valuing me and believing in me for the first time in my life…..

….ie, a charity like Barnardos! – another of those implicitly flawed leaders named by Julia Unwin in her phrase “From RSPB to Barnardos, from Cancer Research UK to the Red Cross”. It isn’t Barnardos’ charitable purpose to empower local communities, or promote democracy and participation for all, but to empower and nurture the most vulnerable and alienated children and young people: as they say on their website “We listen to them. We believe in them – no matter who they are, what they have done or what they have been through.” They reach 248,000 children, young people and carers in a year, and deploy over 20,000 volunteers. Quite a bit of additional agency generated there? Barnardos also research and campaign hard to create a better life for children in the future, drawing on all the listening they have done. So what exactly are we challenging Barnardos to do? Re-examine their theory of change in case they could achieve more for children by a more democratic structure of internal decision-making? or by more diverse methods of consultation at a local level, going beyond the stakeholders currently consulted, before a new project or commissioning bid is launched? or even, more radically, adding to their Constitution a new charitable purpose of community development? Barnardos have broad enough shoulders to endure a friendly challenge from Civil Society Futures, but they would need to know what the challenge actually is.

Now consider the RSPB, whose purpose is not to empower local communities but to protect and nurture birds and nature. To this end, in the UK (I am ignoring here their formidable international role) they mobilise nearly 19,000 volunteers in a year, they have 155 community-based local groups and more than 300 youth groups. They empower untold numbers of children and grown ups to pursue and deepen a love and understanding of nature – through using their resources, bird watching, participating in research, pond dipping, rock pooling, and instructive walks in their 170 nature reserves. They have over a million members, who elect their President, nominate and elect members of Council and can demand a ballot on certain resolutions put to Council, so their governance is quite different from (say) Barnardos. What else are we challenging them to do if they are to play a bigger role in reducing local communities’ sense of alienation, in a way which also actually advances their charitable purpose?

I realise that Julia’s article is only a brief taster, partly designed to provoke. So we must look forward to more expansive, detailed explanations of the challenges emerging from the Civil Society Futures initiative. The generalised challenge to leading voluntary organisations raises a lot of questions because they are so different from each other in terms of their local presence, their purposes, their USPs and their systems of internal governance and external operation. Concepts of alienation, powerlessness and lack of control will also need breaking down into different components.

Every one of our leading civil society organisations has weaknesses and needs to review, evaluate and refresh itself, asking searching questions, at regular intervals. The ones I know already do this. Can Civil Society Futures refine the nature of the challenge to help them do it better? Reading their impact statements,  supporting and participating in some, and observing them over some decades now discloses, in my opinion, for all their faults, an impressive and precious contribution to our common life and, indeed, to a more vivid sense of agency and control in important dimensions for many people. So, in the enthusiasm for transformation, let us, please, also be careful what we wish for.

 

 

 

 

Why Charging Charities is not the answer to the Charity Commission’s strapped budget

Here is an open letter I have written to the Chair of the Charity Commission, Baroness Tina Stowell, on behalf of the Directory of Social Change, of which I am lucky enough to be a Trustee. The letter sets out why none of the available methods of charging charities for their own regulation is without huge problems. The DSC questions whether it can be a good use of time and energy to debate improbable charging options, which detract from the urgent need to make the Commission’s strong case to Government and Parliament.

25 July 2018

Dear Baroness Stowell,

Charging Charities

I write to you as a Trustee of the Directory of Social Change (DSC).  As I am sure you are aware, DSC is a long-standing and engaged supporter of the Charity Commission and its critical role for the sector and the public.

We understand you are wisely taking some time to get a handle on the complex issues around charging charities in some way, to pay for some of the work of the Charity Commission (“the Commission”). Helen Stephenson has repeated recently that she wants to have that conversation with the sector, so we assume that the subject remains live. I have been asked to express the charity’s reservations about this.

DSC has consistently argued that it has been a short-sighted, counter-productive policy to slash the Commission’s budget in recent years. We also strongly espouse the importance of a genuinely independent regulator – independent of the Government of the day, and independent of the sector, championing the long-term public interest in a healthy charity sector without fear or favour. We know how important it is to secure not just more funds, but more predictable funds, for the Commission.

Until your arrival, the leading policy idea for consultation was said to be a levy on larger charities to raise about £7 million per year, but we assume other models of charging may also be on the table.

DSC is opposed to the idea of charging charities for regulation, or indeed any other services provided by the Commission to the sector. Of course, we understand the extreme pressures the Commission is under, not least that the budget is dependent on regular public expenditure negotiations with a Government Department and HM Treasury.

However, we do not believe that removing the burden from the Exchequer and putting it more onto charities (and by proxy, on charitable donors) is the best course of action or the right one in principle.

So far, the options around charging can be broadly divided into three types, which we examine in turn. First, charging all or most kinds of charities some form of levy, eg on a sliding scale; second, charging this only to some (probably larger) charities; and third, charging for particular services or based on processes (i.e. submitting reports and accounts, or registration). There are advantages and disadvantages with each approach.

Charging all or most charities a levy

This approach is the only one that could yield most of the Commission’s budget. So it could substantially improve the quantum and predictability of funding and largely eliminate financial dependence on the Government of the day. If done on a sliding scale, it could be roughly proportionate and more affordable for smaller organisations. However, there would also be significant downsides:

 

  • There would be a perception of dependence on the sector, which could undermine the status of the Commission as acting independently of charities in the public interest. If charities pay the piper, how many people will trust the piper to call the tune independently in the longer run?

 

  • The mechanisms of collecting and chasing fees, and bringing defaulters to book, and deciding what to do about charities that have more than one regulator, constitute a formidable administrative nightmare – which might be disproportionate to the revenue raised.

 

  • It would be a massive change in the bargain that, with all party support in Parliament for many decades, has governed the relationship between charities and the wider public (including donors and volunteers).

 

  • It is a duty of Trustees to ensure that the charitable funds entrusted to them should be spent in the best possible way to support their charitable objects – not the Charity Commission’s regulatory mission. People give not to charity in general but to particular charitable causes.

 

  1. Charging only some (likely larger) charities a levy

The advantages of this approach would be that it might reduce potential opposition from a majority of the sector, which is comprised predominantly of small and micro charities, many if not most of which would very likely be unable or unwilling to pay a levy. The burden would fall on those with the greatest income. However, this too has significant disadvantages, namely:

  • It would be arbitrary and unfair that donors to larger charities would wind up subsidising the regulation for everyone else. Plus, where would the dividing line be set, and who would decide whether and why this was just or fair? If the levy is a flat rate, why should larger charities with widely different incomes pay the same amount while others pay nothing at all?

 

  • It does not deal with the problem of dependence on Government for most of the Commission’s budget.

 

  • If only larger charities must pay a levy, paying as it were for the privilege of being a charity whose reputation benefits from regulation, and effectively subsidising the good regulation of smaller charities, those charities could reasonably expect a bigger say in the Commission’s strategic priorities, or governance. This could threaten the perception, and reality, of the regulator’s independence.

 

  • Even a limited levy on the larger charities would be the thin end of the wedge, leading to progressive atrophy of public expenditure on charity regulation. Once the principle is accepted that charities should pay towards their regulation, the walls are breached. Why not then, in a couple of years, a bit more? Then more again? “Assurances” to the contrary would be inherently unreliable in the long run.

 

  • The Commission has previously mooted the argument that a levy could pay for the “softer” part of the Commission’s role, whereas public expenditure should pay for investigation and compliance. This is a flawed narrative – that the “real” or “essential” work of the Commission is to be a policeman whereas positive, preventive work to make compliance work less necessary is a soft luxury. DSC maintains that good regulation integrates preventive, positive and reactive work as an interrelated whole. We are really pleased to note that you and Helen now seem to be leading in this spirit.

 

  1. Charging for specific services or regulatory processes

 

This option has theoretical advantages over a levy. Trustees and donors might have fewer objections in principle to paying for a service relevant to their own cause and charity than for services which benefit other unrelated charities and causes. Those who need the service would pay for it. However, even with this there remain big problems, because:

 

  • There are problems of principle. The charity sector is accustomed to a bargain with society where services from the Commission are available free at the point of need. Similarly, trustees are volunteers who do not derive personal profit from the charity’s work. Changing that bargain is no small thing.

 

 

  • This option does not deal with continuing dependence on Government for most of the Commission’s funding.

 

  • There could be undesirable deterrent effects. If I have to pay for such and such a product or service, perhaps I think can do without – when actually I do need it? This could drive poorer compliance from those charities that need it most. Enabling regulation could well be unintentionally weakened.

 

  • There could be perceived injustice where charities that are as good as gold must pay for certain services whereas charities that behave badly and cause damage to the sector wind up paying nothing towards the untold hours of Commission work that they cause.

 

  • Similarly to the sliding scale levy options, designing and enforcing the system of services and payments would introduce major administration and transaction costs. How would a fair distinction be made between what is to be paid for by a charity and what can be funded from the public purse because Parliament wishes to encourage a healthy charity sector?

 

So, all of these options come with serious downsides.

 

  1. Further points to consider around introducing a levy or charges

 

  • Most if not all these options would require legislation, which would be highly contentious. Is it worth fighting this battle outside and inside Parliament, even if space could ever be found in the legislative programme? Given the major difficulties, how likely is it that a “conversation” will be productive?

 

  • We are not starting from a blank sheet of paper. We are starting with a bargain stretching back into the nineteenth century where the regulation of charities is beneficial to society and a proper call on the public purse. Diverting time and energy into debating levies or charges simply weakens the case to be made in Parliament and Government for proper recognition of the importance of the Commission’s role, via Exchequer spending.

 

  • We know that many regulated bodies in other spheres pay towards their regulation – but rather than using this as an argument for introducing charges, the Charity Commission should instead explain why the charity sector is distinct. It does not operate for profit and is to a large degree supported by public donations. It is long established policy to encourage volunteering and donations to advance charitable causes for the good of society. It would strengthen your case for funding from the Exchequer if you reiterated this important distinctive point about the charity sector both within government and publicly – and you can be assured of DSC’s vocal support in this.

 

 

  • Please do not put too much weight on the recent finding of your report on public trust, to the effect that most donors would not mind a fraction of their donation going to the Commission. It all depends on the question you ask. What response do you think you would have got to this question: “Would you be happy for a small part of your donation to your favourite cause to pay for regulation by the Charity Commission, which previously has always been paid for in full by the Government?”

 

  1. What we should be debating instead of the various options around charging charities

In conclusion, we believe this whole issue needs to be rethought from fundamental principles. Namely, how can we achieve a sufficient level of predictable funding to support the Charity Commission’s vital work, in a way that enhances rather than risks its independence, and which is fair to charities (and their distinctive role in society) and the donating public? Unfortunately, none of the options presented above provide a good answer to that question.

The answer, in our view, must involve considering how the Commission’s budget is debated and decided within government, and Parliament’s participation in the process, rather than what kind of charges we should or shouldn’t have.

The Charity Commission is not accountable to a Minister or a government department but to Parliament, for very good reasons. It must of course account for spending public money, but its remit and regulatory priorities shouldn’t effectively be set by the Government of the day or cramped via insufficient spending settlements. We should explore ways of giving Parliament more of a binding say in how the budget is set – for example by giving a Committee the power to propose or veto the Commission’s spending settlement. In the meantime, the focus on building the case for more satisfactory Exchequer funding should be maintained, rather than dissipated in debating improbable alternatives involving charging or levies.

Thank you for considering these points as you ponder the best way forward. As always, DSC is transparent in its contributions to public debate, and we will publish our letter and any response from you on our website – in good faith and in the spirit of openness.

Yours sincerely,

 

Andrew Purkis

DSC Trustee

 Doubts about NCVO’s Draft Code of Ethics for Charities

The National Council for Voluntary Organisations (NCVO) is consulting on a draft Code of Ethics for the whole charity sector. There are a number of questions worth pondering carefully about this venture.

  1. It is excellent that there is generous time for consultation. Depending on the response, there would be absolutely no dishonour to anybody if it ends up taking a somewhat different form or with substantially amended content.

Inherent Difficulties of Concept

  1. Charities are so utterly diverse that to identify principles apposite to all is bound to lead to a very high level of generality. The danger is that such a collection of high level generalisations does not add value, even as a checklist, because they can seem abstract: connections with the real life processes and decisions that can turn the principles into reality, and resolve tensions or contradictions between them, are unclear. The Charity Governance Code, which is said to be “complementary” to the draft Code of Ethics, was much more successful in making the links between desirable principles and how to set about enshrining them in the organisation. For instance, it already has in my opinion much more useful material on the subject of diversity and inclusion than the draft Code of Ethics.
  2. The draft Code of Ethics does not even say that every charity should have an explicit description of its values and should review regularly whether they are being fully embodied in the work of the charity: that kind of suggestion, which might be more likely to change actual behaviour, belongs better to the nature of the Charity Governance Code[1].
  3. Indeed, there are disadvantages of having a separate Code of Ethics. It might encourage the dubious idea that it is a subject in its own right, separate from and complementary to good Governance. Since it is essential, however, that the values and ethos of a charity are the ultimate responsibility of the Trustees, and a completely integral part of good governance, is there not a strong case for integrating the draft Code of Ethics into the next iteration of the Charity Governance Code? That stands a better chance of making crucial connections between the core principles of ethical governance (already there in the Charity Governance Code, but capable of elaboration where necessary) and the ethical practice principles, processes and disciplines that can help achieve them.
  4. Moreover, from a Trustee perspective, I can assure you, the fewer Codes, the better: it is more important to get wider digestion and usage of The Essential Trustee and the Charity Governance Code, which are hard enough to get many Trustees to read anyway, than to add to their reading list. And the Charity Governance Code has the advantage of collaborative official auspices that include a number of different umbrella bodies, including but not limited to the NCVO.
  5. So are we sure there is a robust consensus for creating an additional Code of Ethics at all?

 Coherence?

  1. The overall aim of the draft Code is to be a framework within which charities can review their own codes of conduct if they have them, and their processes and policies, taking into account the values shared across the charity sector. A narrower stated aim is to “enable all charities, not matter their size of type of activity, to be a safe place for anyone who comes into contact with them”, reflecting the current anxiety about safeguarding in particular. Perhaps another is to respond to valid criticisms of the sector’s lack of diversity and inclusion. The current draft does not succeed fully in moulding these purposes coherently together.
  2. For example, the importance of inclusion and diversity features strongly in the introductory part of the Code but they do not feature in their own right among the principles later enumerated. Instead, they are treated as scattered subsets of Beneficiaries First, Integrity, Openness and the Right to be Safe. It is unclear how the principle of respecting every individual’s privacy and appropriate confidentiality sits alongside the separate principle of transparency and openness being the default option. It doesn’t seem entirely satisfactory to shoehorn environmental responsibility in under “Integrity”.
  3. The Right to be Safe receives a strong share of attention because of current concerns but the attempt to flesh out the principles in this section still falls short. There is nothing about taking particular care where there are unequal power relationships, about recognising and countering the systematic biases relating to gender (central to a majority of safeguarding cases) and race, about the principle of enabling safe, confidential whistleblowing or involving an independent element in considering safeguarding allegations against senior staff or Trustees. All in all, the draft Code struggles to find a consistent pitch and coherence, though we must remember that it remains work in progress.

Omissions from the draft Code of Ethics

  1. It is striking that there is no mention of the systematic bias that women and ethnic minorities commonly face in our society, including the charity sector. Would it not be more likely to have an impact if this were made explicit?
  2. The draft Code says charities should reflect their charitable ethos in every activity they undertake, but this is of limited help since there is no overall definition of what a charitable ethos is. One aspect is rightly emphasised under the heading Beneficiaries First: keeping the charitable objects and the interests of the beneficiaries front and central is absolutely part of a charitable ethos, but only part. What about public benefit – understanding what it means, what it precludes, being accountable for it, living it – which is one core ethical as well as legal imperative that all charities by definition have in common? No mention. What about the core value of independence? No mention. For the vast majority of charities, what about cherishing the salience of volunteer effort (including volunteer Trustees) and money freely given by donors, as another core element of charitable ethos? As part of that, what about avoiding a purely instrumental or manipulative view of donors? Thin pickings on all this in the draft Code so far.
  3. To be fair, no manageable Code can cover every ethical issue, and this is a difficult job, but there are other omissions I found disappointing. There is no principle of Civility, which I particularly associate with NCVO: abjuring the coarsening of public discourse with its careless slogans and mutually uncomprehending echo chambers, in favour of respectful listening, patient explanation and engagement with those with whom we disagree, within and beyond the sector. For it is certainly not charitable causes that will come out on top if we collude with polarised shouting. Should this not be addressed better in the draft Code?
  4. Some charities carry on the way they always have without any process of critical self-review or consideration of alternatives: is this not a key ethical issue? Is it ethical for a charity to continue its work without attempting to assess the effectiveness and impact of what it is doing? Is it ethical to continue as a separate charity without considering the possibility of a merger, a de-merger, closer collaboration, or termination of the charity? Why is there no mention of these?

Conclusion

  1. The current draft has plenty of helpful elements but it does not at present do the job. The inherent problems of having a separate Code of Ethics for the whole charity sector under NCVO auspices are formidable. A more fruitful alternative may be to integrate the best of the draft Code of Ethics into the Charity Governance Code (in so far as they are not already integrated), which is already establishing itself, and has a much better chance of connecting broad principles to the processes, policies and choices that have to be made in practice if they are to become a living reality. It also has an encouragingly broad auspices, including but not limited to NCVO.
  2. Whether or not this course is chosen, the most significant omissions in the current draft of the Code should be rectified. If it is to exist separately at all, it must carry a high level of authority.

 

 

 

[1] This is not specifically my idea; it has come up in conversation with other charity Chairs.

The Institute of Economic Affairs (IEA) is at it again

The IEA seems to have shot itself in the foot this time.

IEA is a free market think tank that enjoys charitable status for the advancement of education. I have drawn attention repeatedly to what I regard as breaches of the Charity Commission’s guidance on the proper nature of charitable education – that it should inform the public in a balanced and neutral way, and should not be promoting a predetermined position, particularly on controversial topics. There are also, in my opinion, endemic  breaches by IEA of the separate guidance that the purpose of a charity must be exclusively charitable, since it seems to me that part of the purpose of the IEA is political (as defined by the Charity Commission in CC9) because it consistently seeks to shrink the state in many different dimensions of policy.

Twice in recent times, the Charity Commission has investigated such complaints against the IEA, and twice thought it had achieved a thorough understanding with the Trustees about observing the rules of a charity for the advancement of education. The first time, however, it was not very long before the supposed understanding collapsed. The Commission had to tell the IEA to take down and remove its joint “Manifesto Proposals for a Conservative Government” that produced various contentious political proposals in association with the non-charitable Taxpayers’ Alliance. They thought they had also reached a deeper understanding on being particularly careful about press releases or social media contributions that might be seen as promoting a predetermined or political view rather than charitable education. In a sense, one might assume, the Trustees would realise that they were on probation, to demonstrate adherence to this supposed second thorough understanding, having failed to live up to the previous one.

Then came the recent ruling by the Commission about the Legatum Institute Foundation’s report on Brexit. That report was found to breach the Commission’s guidance because it “failed to make clear that there are multiple potential Brexit outcomes and that free trade is one of a number of political outcomes.” As a result, the report did not demonstrate the necessary balance and neutrality of charitable education: it “could be seen as promoting a particular political view for the aim of a particular outcome and recommending specific government action that reflects this.” That, said the Commission, is inconsistent with the purpose of charitable education.

I wrote to the Charity Commission to point out that this ruling cast grave doubt over the charitable status of the IEA, since its reports routinely bear the same hallmarks of those complained of by the Commission in the Legatum case.

In these circumstances, would you assume that the IEA would be particularly careful to demonstrate its own observance of the rules?

Not a bit of it. The day before the Prime Minister’s all day meeting with her Cabinet at Chequers on 6 July, the IEA tweeted the following:

Thus, the IEA follows almost to the letter what the Commission said was wrong in the Legatum report. The tweet “failed to make clear that there are multiple potential Brexit outcomes and that free trade is one of a number of political outcomes.”  And the tweet “could be seen as promoting a particular political view for the aim of a particular outcome and recommending specific government action that reflects this” – and on the same subject.

The tweet makes “simple” political proposals that have nothing to do with charitable education, in pursuit of the IEA’s objective of shrinking the state and promoting specific policies that reflect their pretermined position. They make something of a mockery of the Commission’s guidance that “the nature of education is informative, enabling the reader to form their own conclusions” and “it is not generally appropriate for an educational charity to advocate changes in public policy.”

I have written to Helen Stephenson at the Charity Commission complaining about this further breach.

Will it be a case of “three strikes and you’re out” when it comes to the IEA’s charity status? Will the Commission accept that this leopard is not going to change its spots?

What is charitable education? Status of Institute of Economic Affairs under spotlight again

The Charity Commission has recently confirmed that charitable education for the public benefit must inform the public in a balanced and neutral way. It should not, they say, comprise selectively presented information that is designed to promote a particular point of view.

The Legatum Institute Foundation recently fell foul of this guidance with its report “Brexit Inflection Point: The Pathway to Prosperity” published on 4 November 2017″. The Commission decided that it was OK for Legatum to have a free trade perspective as a starting point, but it was not OK to fail to make clear that there are multiple Brexit outcomes and that free trade is only one of a number of potential political outcomes that might be sought. It was not OK to fail to present balanced, neutral evidence and analysis. As a result, the Commission concludes that the report could be seen as promoting a particular political view for the aim of a particular outcome and recommending specific Government action that reflects this. That is inconsistent, says the Commission, with the purpose of charitable education.

I have written to Helen Stephenson, Chief Executive of the Charity Commission, to suggest that this guidance is incompatible with the continuing charitable status of the free market think tank The Institute of Economic Affairs (IEA).

The IEA produces a whole stream of reports, articles and verbal media contributions on highly controversial subjects, all with a view to shrinking the state and promoting free market solutions. They are not balanced and neutral. There is no consideration of the downsides of policies recommended by IEA reports nor of other desirable outcomes or alternatives. As I write to Helen Stephenson, “Whether the subject is the growth of obesity, the taxation of alcohol, public health policies, taxation, tax havens, Sock Puppets or solving the housing crisis by reducing planning controls, you will find in every case a one-sided and controversial contribution (whether adorned by footnotes or not) aimed at reducing the role of the state.” One of the latest is, in the words chosen by IEA, “a report debunking the myths surrounding the purposes of tax havens”. Does that sound like a balanced and neutral contribution? Remember the Commission’s findings for the wider sector from the Atlantic Bridge case in 2010: “One of the key features of advancing education or promoting research for the public benefit in charity law is that the education or research must not promote a position on a contested issue or area, unless that view is uncontroversial”. In my view, this is what the IEA does all the time.

To my mind, the reason for such frequent transgressions (as I see them) against the guidance is plain from reading the IEA’s website. This explains that the purpose of the IEA as understood by itself is not merely academic or intellectual but is also directed at securing lower taxes, lighter regulation and what they call “freedom” in education and health. It explains that all of its contributors and partners are, explicitly, looking out for ways of shrinking the state. That agenda is of its nature partly political, as defined by the Commission in its guidance on political activity. CC9 says that a charity cannot exist, either wholly or in part, for any purpose “directed at…securing or opposing a change in the law, policy or decisions of central government, local authorities, or other public bodies”, eg the purpose of shrinking or weakening the state in different dimensions of public policy.

Like Widow Twankey, the IEA wears the clothes of an educational charity, but the reality beneath is different: an organisation with a partly political purpose and a controversial, predetermined viewpoint which it seeks to promote with vigorous consistency. This purpose might be good for public debate and pluralism, but it is not charitable.

I am leaving for another time the debate over another aspect of the IEA, which is its untransparent treatment of who funds its work. Its standards of transparency are far below those of many other well known charitable think tanks. The public does not know whether those funding its work might have a personal or financial interest in relation to tobacco, sugar, tax havens, alcoholic drink, and so forth. This is not good for public confidence in the nature of charities’ work as being exclusively for the benefit of the public. There are complex arguments about what could effectively and properly be done about this.

For now, the key question is this. If the IEA consistently breaches the guidance recently reaffirmed in the Legatum case, why should it remain recognised by the Charity Commission as an educational charity? There have been other cases where a charity originally properly registered as an educational charity turned out, in practice, not to act like one. An example is the Atlantic Bridge, registered as a charity in 2003, on which the Commission produced a critical report in 2010, on the grounds for example that “its activities promoted a particular point of view which was not uncontroversial, and were consequently not educational”. Atlantic Bridge was later dissolved by its Trustees.

I have asked Helen Stephenson to consider the issues relating to the IEA afresh, taking full account of the Commission’s conclusions in the Legatum case. It isn’t easy, but the integrity and consistency of the Commission’s guidance on both political activity and the nature of charitable education are precious commodities in a world of polarised, one sided opinions.

The full text of my letter to Helen Stephenson is attached below.

“Dear Helen,

Institute of Economic Affairs (IEA)

The Commission’s recently published conclusions of its case inquiry into the Legatum Institute Foundation provide welcome reconfirmation of the Commission’s guidance on the nature of charitable education for the public benefit. They therefore also shed light on the (to my mind) unresolved issues about whether the IEA is really an educational charity.

This has been the subject of correspondence between me and your predecessor and your colleague [name redacted at request of Charity Commission]. The last in this series is my letter of 8 November 2017, to which I discovered after waiting patiently for five months that I was not going to receive a substantive reply.

The recent ruling on Legatum does, however, emphasise afresh “the necessary balance and neutrality required of an educational charity”. This is crucial to the question of whether the IEA is or should be a charity or not and offers a clear prism through which to review the issues.

You have ruled that having a free trade perspective as a starting point is not in itself a problem with Legatum. Similarly, you have previously made clear that having a free market perspective is not in itself a problem with the IEA. But you go on to say of the Legatum case: “to be consistent with the charity’s object to advance education, a report of this nature (Brexit Inflection Point: The Pathway to Prosperity”, 4 November 2017) should make clear that a desired outcome of free trade is only one of a number of the potential political outcomes that might be sought. It should present balanced, neutral evidence and analysis explaining why it has chosen to adopt a free trade perspective over others”. The Legatum report is not in the Commission’s view balanced and neutral in this way, and so you conclude that the report could be seen as promoting a particular political view for the aim of a particular outcome and recommending specific government action that reflects this. You say that “failing to make clear that there are multiple potential Brexit outcomes and that free trade is one of a number of political outcomes, the report is not consistent with the advancement of education for the public benefit.”

Let us now apply this guidance to the work of the IEA.

In the IEA’s case, I do not accept that the real purpose, as defined in practice, is exclusively charitable anyway. The IEA does not merely have a general perspective of favouring the benefits of the free market as an approach to economics. Part of its real purpose as defined on its website is directed at securing lower taxes, lower regulation and what they call “freedom” in education and health, and all its contributors and partners are, they say, explicitly looking for ways of shrinking the state. This falls squarely and unequivocally within CC9‘s definition of “political”, because it includes (in the words of CC9) “securing or opposing a change in the law, policy or decisions of central government, local authorities or other public bodies.” I have also yet to meet anyone who shares the view put forward by the Commission that this viewpoint is “relatively uncontroversial”. It is highly controversial, as a matter of objective fact. In my opinion, therefore, the purpose of IEA as explained in their own words is clearly partly political and cannot be exclusively charitable. It includes also the purpose of promoting a controversial predetermined conclusion that is inconsistent with your guidance on the nature of charitable education.

It is true that the IEA claims to have no corporate position, but this is undermined by the explanation of purpose as quoted above and by the fact that every report and article is in line with the partly political purpose of shrinking the state. When we hear an IEA staff member joining in public debate, we must assume that person is speaking on behalf of the IEA. When we read on the IEA website that, for example,  “The IEA releases a report debunking the myths surrounding the purposes of tax havens” and again the headline “We have tax havens to thank for rising levels of global prosperity” (6 June 2018) we are bound to assume unless explicitly told otherwise that this is endorsed by or represents the views of the charity. These are not placed in inverted commas by the IEA to suggest they are someone else’s views. There is no disclaimer saying in promotional press releases that these do not necessarily represent the views of the IEA as a charity.

What has changed since our previous correspondence, however, is that even if the predetermined viewpoint of the IEA were not partly political of its nature, (which in my view it clearly is), their work would still fall foul of the fresh clarification of your guidance. Even if the starting point of Legatum is legitimate, you say, a report on a controversial political subject should present balanced, neutral evidence and recognise the variety of possible outcomes that might be sought. Now the status and role of tax havens is a live and controversial political issue, not only in the UK but globally. So is a “report debunking the myths surrounding the purposes of tax havens” (IEA’s words) of a balanced and neutral type to fit the requirements applied to the Legatum case? No, as this description by the IEA makes clear, this is a one-sided debunking exercise.

Similarly, none of the IEA reports mentioned in my previous correspondence makes a serious effort to be balanced and neutral. There is no analysis of possible downsides to recommended policies, nor of other possibly desirable outcomes. Whether the subject is the growth of obesity, the taxation of alcohol, public health policies, taxation, tax havens, Sock Puppets, or solution to the housing crisis, you will not find a neutral and balanced contribution by the IEA, you will find in every case a one-sided and controversial contribution (whether adorned with footnotes or not) aimed at reducing the role of the state.

The IEA also claims that it does not “sell” policy. Well, it publicises these reports vigorously through the media, fields staff to promote and defend them, summarises them without placing the summary in inverted commas and gives no indication to anyone visiting their policy reports and prescriptions section of the website or press releases that these may not represent the views of the charity. If I describe to you the blessings and advantages of a particular Hoover and promote it through social media, in what sense am I not “selling” it?

In my view it is wrong to bend over backwards to argue that all this is consistent with your own guidance on the nature of charitable education. As the Commission’s guidance states, “promoting a specific point of view may be a way of furthering another charitable aim, but it would not be education”.

This is not just a re-hash of previous correspondence. The new factor here is the reaffirmation in the Legatum case of your guidance about charitable education, including the requirement to be neutral and balanced in the way in which an argument or piece of research is developed from what could in principle be a legitimate starting point. The truth is that, using the language you employ in relation to the Legatum ruling, the IEA does not “inform the public in a balanced and neutral way”. Its hallmark is precisely to sponsor and publicise contributions that “are based on selectively presented information that is designed to promote a particular point of view”, namely that the State must be shrunk – a partly political objective.

Like Widow Twankey, the IEA wears the clothes of an educational charity but the reality beneath is different.

The Commission does its best at the time of registration to distinguish between a proper charity and an organisation that should not receive charitable status, but sometimes the way the “charity” interprets its objects and pursues them in practice over time turns out to be non-charitable, and in that case there is no dishonour in the Commission’s revising its assessment accordingly.

I do not agree with the argument that, because there are charitable think tanks with different perspectives, if you move against one they will all fall down like dominoes. I do not accept that my criticisms of the IEA’s charity status apply to most other charitable think tanks. Surely every case should be looked at on its individual merits, to see if it follows the Commission’s guidance on what it means to be an educational charity? Some think tanks are charitable, some are not. Similarly, I do not agree with the sentiment that left wing people criticise the right-wing think-tanks while right wing people criticise the left wing ones, so they cancel each other out and it’s all politically motivated. On the contrary, in the world of politically controversial policy debate, the even handed, consistent application of the Commission’s public guidance is all the more important.

I am refraining from raising again here another aspect of the IEA that causes disquiet, namely the lack of transparency about who is donating funds to pay for their work. This leads to speculation that such donors might have some sort of financial interest in the views promoted by the IEA, which doesn’t help trust and confidence in charities as existing purely for the public benefit. The arguments and counter- arguments about that are an important but separate matter.

I do ask the Commission to reassess the charity status of the IEA in the light of their conclusions and guidance in the Legatum case.

 

Yours sincerely,

 

Andrew Purkis.”

 

 

Tina Stowell makes her Debut

The new Chair of the Charity Commission for England and Wales, Baroness Tina Stowell, made her first major speech to the NCVO Conference on 16 April. I find it the most interesting and thought-provoking speech made by a Chair of the Charity Commission for some years (though that is not a high bar). She also emphasised that she knows she has much to learn and is anxious to listen. Here are my suggestions of what she may want to listen and learn about particularly carefully as her thinking develops.

The speech contains some excellent passages. Here are my three favourite nuggets:

  1. “So why do people really want more transparency from charities? In my view, their demand for information is a proxy for something far more profound. They want proof that you are who you say you are.” This is original and insightful.
  2. “The public want to be able to trust that, no matter how you slice a charity, what you’ll find is a relentless focus on its charitable purpose. And that means demonstrating that the way charities prioritise, behave and conduct themselves is focussed solely on delivering the right results for the people they say they support.” Hear, hear.
  3. [The Commission needs to] “help make sure charities get it right before things can go wrong. And, make sure they are better equipped to respond in a way that promotes public trust when, sadly, human or systems failings do occur”. This is a relief and pleasure to read, replacing the flawed narrative that the Commission’s “essential” role is to be a policeman.

A second category of passages in the speech is similarly thought-provoking but does not stand up quite so well to careful consideration. For example, Stowell argues that people are less trusting of institutions and of those in positions of authority than they once were “not because our parents and gransparents were more naive [but] because people now have more evidence to prove their suspicions”. An interesting proposition, but a bit shaky. Actually, in some respects I am sure my parents and grandparents were naive, especially on many matters to do with sex and patriarchy. And much of the changes in attitudes are to do with cultural and economic winds of change rather than “evidence”. This matters, since Stowell wants to frame the mission of the Commission in terms of responding to the decline in trust, which therefore should explained with due care.

At another point, Stowell tries to contrast a supermarket, that can keep selling its wares even if its leaders are seen to fail, with charities, that have only their purpose. In fact, however, many charities can and do carry on when their leaders fail in some respect, because their services and other offerings for the benefit of the public continue in much the same way as a supermarket’s. Churches carry on. Universities paying Vice Chancellors gigantic salaries carry on. Oxfam and Save The Children and RNIB will carry on. Their continuing reasons for existence are entirely clear.

We now move into a third category of parts of the speech where to my mind red lights begin to flash. In another doubtful generalisation, she says of failing institutions where people believe their leaders are running them in their own interests: “those institutions have lost sight of their purpose: their purpose which goes beyond money-making or gaining power”. Unfortunately, it is ambiguous as to exactly which institutions she is talking about, but if she were understood to be referring to charities hit by recent scandals she would be preempting the Commission’s own inquiries and quite probably saying something unfair and untrue.

“At its heart,” Stowell argues, “charity is about attitudes, behaviours and qualities that unite us and that we can all sign up to. Qualities such as purpose, conviction, selflessness, generosity”. The problem with this formulation is that although it might just be true at a theoretical and philosophical level, charity as practised by charities only sometimes brings people together, as in a corporation’s “charity day” bringing the workforce together in support of benign charities that everyone supports. In many other cases they can be contentious and divisive, because many charities want to change the world and many other people, other charities and vested interests do not like it. One of the underpinnings of the erroneous notion that campaigning is against the spirit of charity is the quite popular belief that charity should be uncontentious. But in fact, much of the advancement of religion is contentious, the promotion and defence of human rights is contentious, the protection of the environment is contentious, the welfare of animals is contentious, the abolition of slavery was contentious, the assertion of women’s rights and children’s rights is contentious, and so on. Many charitable causes do not unite people, nor should they. Perhaps Baroness Stowell did not intend to say that the pursuit of charitable causes unites people, but the fact is that charity as practised in the real world is about attitudes, behaviours and qualities that often form part of the contention and lively argument that enriches democratic society. It is to be hoped that she will champion this part of charities’ contribution to our society more consistently than her predecessor.

Gareth Jones has already questioned, in Civil Society News, Stowell’s dictum that “the Commission’s job is not to represent charities to the public, but to represent the public interest to you”. Interesting and thought provoking again! The task of promoting the trust and confidence of the public in charities, and upholding the public interest in charity, cannot, however, be a one way effort of policing, cajoling and helping the charity sector, vital as that is. There should in my opinion also be a dimension of making authoritative contributions to public understanding and debate, from a position of expertise independent of the sector itself and independent of party politics, about the nature and significance of charitable endeavour, why it is in the public interest and how best its contribution may be safeguarded, all informed by the long, historic development of charity law in the Courts and in Parliament. The views of the public are not just a given to be explained to the sector by the Commission. They are a changing, fluid mass of complex feelings and opinions that can be shaped, better informed and educated, not least as part of the Commission’s role.

And, as Gareth Jones pointed out in Civil Society News, if the Commission’s leaders spend too much time and colourful phraseology bemoaning the failings and slumping reputation of the sector, they can run the risk of adding to the damage. To be fair, Stowell has plenty of positive things to say, too, but Gareth’s warning is a fair one.

Stowell is also in potentially treacherous territory basing her framing of the Commission’s mission on research into public trust and confidence. One of the huge difficulties is that most of the sample usually have only the haziest idea of what a charity is, which organisations are charitable and which are not. In the past, the Commission’s research has registered the effects on that part (maybe a third) of the sample that knows least about charities, of the fact that the media has been covering scandals involving charities. Hence, in the wake of the fundraising scandals, research a couple of years’ ago already placed trust in charities on a par with trust in the man or woman in the street, with a partial recovery last year. This research series never showed a time when people generally, as she implies, gave charities the benefit of the doubt; and, in the absence of such evidence, that might be one of those useful straw men. I urge Baroness Stowell to bring all her intellectual rigour to bear on the interpretation and use of this tricky data, not to put too much weight on it, and to take into account other indicators such as the pattern of charitable giving, volunteering, use of charitable services, and support of charitable campaigns, forming a rounded view.

Doing the very best we all can to enhance standards, improve public confidence and above all effectiveness of delivery to beneficiaries does not depend on a movement up or down these imperfect thermometers measuring public trust, nor on countering scandals affecting particular parts of such a varied sector from time to time. The mission is long term and permanent. Good luck to Tina Stowell and the Commission as they take this mission on to the next stage.

Her debut may be a mixed bag, but things are looking up when a speech like this is genuinely interesting, provokes hard thinking and provides at least a few nuggets of gold.

The Stowell Candidacy and the Public Interest

In a series of helpful tweets by Julia Unwin, who was on the Panel recommending Baroness Stowell as preferred candidate as Chair of the Charity Commission, she affirmed that there had been a rigorous process and that Stowell had given an excellent interview and received unanimous support from the Panel as the best candidate. Unwin received a cool response from Baroness Glenys Thornton, Shadow Health Minister in the Lords:

“It really is not seen to be an independent person you have appointed. Perception is important”.

Baroness Thornton has hit the nail on the head, leaving us all in the sector and beyond in a quandary.

Before continuing, and for the sake of complete transparency, I disclose that I applied for the post myself and was not shortlisted. I make no complaint; though I believed in my application, I could give you some good reasons for preferring others, and I have learned over the years that when one door closes, others open. But if you think that anything that I say on this subject is bound to be contaminated by sour grapes, please stop reading now.

For those still reading, it is ironical that over the years NCVO has taken the lead in insisting that perception (not necessarily reality) of party political bias is detrimental to the work and effectiveness of the Charity Commission. That was the core reason for their 2015 proposals for reform of the appointments system. Now they are saying that we should accept and welcome Baroness Stowell as Chair but continue to seek reform of the process. But right now the issue is whether or not to welcome, accept or resist the appointment of this particular candidate, in the light of Baroness Thornton’s irrefutable objection.

As NCVO has explained so well, perception of party political bias is a destructive force, blighting the legitimacy and effectiveness of the Commission. Suzi Leather will I am sure have given a wonderful interview to her Panel and has brilliant gifts, but her tenure as Chair was compromised in key respects by the fact that she was a Labour Party member and perceived to be close to the Labour Government. William Shawcross is also found by many to be a thoroughly good egg and a person of courtesy and integrity, but his perceived closeness to Conservative circles, his vocal hostility to the Labour Party in recent publications and the fact that he was only supported by a slim majority of the Select Committee split on party lines cast a shadow over his effectiveness. History therefore tells us not to place unlimited faith in a successful interview before a public appointments panel of excellent people like Julia.

After all, Suzi Leather was a mere Party member. William Shawcross, too, had never had a formal Conservative Party role nor been a member. But Baroness Stowell has worked in the engine room of the Conservative Party Leader and has herself recently actually led the Conservatives in the House of Lords. In my view, confirmed by Glenys Thornton, it is simply impossible to see that such a person can ever be perceived to be “demonstrably independent”, however professional and dispassionate she may well be in person, just as Suzi Leather was (as I know from personal experience) and just as I gather that William Shawcross was too. So we are now asked to welcome someone with a far more conspicuous and unambiguous party political background than any other Charity Commission Chair in history. Each time Baroness Stowell sits down as Chair of Charity Commission, a very large elephant will sit down beside her.

On her other side will sit a slightly smaller elephant. This is the unanimous verdict of the Select Committee on Culture, Media and Sport, led by its Conservative Chair, that they could not support her candidature. Only one of these reasons was the party political perception problem. Another was the very sparse knowledge and experience she was able to demonstrate of the charity sector. With our experience of the Shawcross years, and the continuing relative scarcity of people on  the Board with significant charity sector experience, this too is a non-trivial obstacle. Another was what the Committee unanimously felt was an unconvincing performance in answering their respectful and pertinent questioning. Everyone will for ever know that she was unable to convince even one member of the Committee to support her. What a dreadful way to start a public appointment.

Some including Julia Unwin have said how suspicious they are of politicians second-guessing the decisions of an independent Panel and rigorous process. But there are two sound  reasons why the Select Committee is assigned a role in the process. Firstly, the Commission is accountable to Parliament, not the Government of the day. Parliament, yes, politicians, across party lines, represent the public interest in a flourishing charity sector. The Commission is a non Ministerial public body, independent of the Government of the day. That is why NCVO assigned to Parliament  in their 2015 reform proposals a much more important role to a cross Party Parliamentary Committee than the one it has today. So Parliament’s considered view really matters.

Secondly, politicians may be more attuned to the issue of party political perceptions than the non-political Panel members. They may understand best how politically loaded the role of the Commission is: think of public schools, political campaigning, whether think tanks are charities, whether a particular religion is charitable, whether a charity infringes party political neutrality, and so on. They may understand that someone who has had such high profile party political roles has a mountain too steep and difficult to climb. Politicians have their own expertise in this crucial dimension, which is not to be pooh-poohed. And if there is a role for a Select Committee in the process for good reasons, Ministers should not carry on as if its careful inquiry had never happened.

My simple conclusion, disentangling these core issues from the fake news about the Panel’s views that was also circulating before being corrected by Julia Unwin,  is that this appointment is wrong. Each umbrella body, each charity, each person who treasures the public interest in the charity sector and wants it regulated in the most effective way possible should now ask themselves: do we keep tactical silence? Do we pretend to ignore the two elephants accompanying the preferred candidate as she enters the Commission offices in Petty France? Do we hope that the candidate will withdraw? Depending on your role, it is a quandary. But it is not the characteristic of most of civil society to go along too quietly with something that affects them and their causes deeply and which they believe to be wrong.

If the Charity Commission asks for your charity’s money, here are some relevant Trustees’ duties

Trustees should look at all proposals for spending their money – including proposals from the Charity Commission itself – in accordance with the duties of Trustees as set out by the Charity Commission.

The Charity Commission’s Chief Executive has made clear that the Commission intends to consult the sector about a levy on larger charities to pay for some of the softer side of regulation such as advice and, according to Civil Society News, for enabling schemes and permissions. A figure of £7 million per year has been mentioned.

I have challenged the rationale for this proposal elsewhere (“Should Charities Pay for Charity Commission’s advice?”, 13 January 2018, and “Paying for the Regulator: why the charity sector is not like all the others”, 2 August 2017. ). I now want to remind Trustees – in particular those of larger charities who would pay the levy – of relevant guidance from the Commission about their duties as they consider their response. It is all taken from The Essential Trustee.

“You and your co-trustees must make sure the charity is carrying out the purposes for which is is set up, and no other purposes.” (my italics).   So if someone asks you to fund a different purpose, however admirable, which is not part of your charitable objects and does not advance or support them, you must say no. Expenditure which does not meet these criteria would be a breach of your Trustee duties.

“You must make sure the charity’s assets are only used to support or carry out its purposes”. Hence it is not permissible to choose to spend part of your assets on something that does not support or carry out your purposes. Even more pointedly:

“You must do what you and your co-trustees (and no-one else) decide will best enable the charity to carry out its purposes” (my italics). So if there is in the view of your Board, and no-one else, a better way of spending the money for the long term good of your cause, you should not willingly spend it on a worse option.

These are some of the key considerations which Trustees “must” (not just should) have in mind, according to the Commission. They subsume issues of trust and obligation when it comes to donors who give their money for a particular charitable purpose. You have to be able to look into their eyes and tell them that you are using their donations for your chosen cause in the best way you can.

You will want to address the argument that, if the Commission is better able to do preventive work, the reputation of charity in general, including your charity, will be better protected.

So, for example, if you are a Trustee of a major children’s organisation, is a levy to the Charity Commission clearly a means of supporting your mission to children? More than that, is it the best available way of spending that money for that purpose? The same question applies to the cancer charities, those for disabled people, overseas aid, medical, Arts, museums, the environment, human rights and all the rest. Your duties are to pursue your charitable objectives exclusively, not other charities’ purposes nor the regulator’s purposes nor any political purpose unless it is in support of your own particular charitable objects.

For many years, regulation has been correctly understood as a balanced mix of preventive, awareness raising and corrective activity. Such regulation has been seen as for the benefit of society as a whole, and hence a claim on the public purse.

It is only relatively recently that the Commission’s Board under William Shawcross colluded with the simplistic notion that the “essential” role of the Commission was to be a “policeman”, setting up the scenario where Government says it will pay only for compliance and investigation. It is also only relatively recently that the budget of the Commission has been slashed as part of austerity economics. Despite that, the relevant Government Department (DCMS) now spends many multiples of £7 million on the National Citizenship Service which has not done too well at the hands of the National Audit Office, but says it cannot find an extra £7 million for the better regulation of the entire charity sector. This is just one example of priorities for the public purse that are open to challenge.

Trustees must ask themselves if these are immutable and permanent facts of life, or whether they might change. They should also ask whether, if they were to declare their charities willing to pay for some of the Commission’s regulation, these “facts” would indeed become immutable and permanent even if they were not so before.

Many Trustees of large charities will remember life not so long ago, when the Charity Commission’s budget was roughly twice its present size of £20 million. Was this so much better and so important to the effective pursuit of their charity’s purposes that it justifies the expenditure of some of their own charitable funds now, as a priority, in order to enable the Commission to do some of what it was previously paid to do via public expenditure? Much of this advice, these permissions and schemes will apply to a myriad of charities with completely different purposes, geographical scope and beneficiary groups from theirs. It may be an excellent purpose to provide such advice but is it their charitable purpose to pay for it?

The duties of Trustees as defined above by the Commission will require some careful, clear and tough analysis by the Trustees if the proposal that their charitable funds should pay for advice work by the Commission is embraced by the new Chair of the Commission and finally goes out to consultation.