After almost a year of looking at the challenges facing the voluntary sector, the House of Lords Select Committee on Charities published a wide-ranging report with 100 conclusions and recommendations.
The report, Stronger Charities for a Stronger Society, was published today (Sunday 26 March).
Some sector leaders thought there were a lot of positives in the report, and urged government to take it forward, but others were disappointed that it did not go further.
Key themes that emerged from the report were the accessibility of funding, improving governance, and reform of the regulatory environment.
NCVO: ‘Charging for regulation must go hand in hand with governance reform’
NCVO focused on the committee's 'grave concerns' about charging for regulation. It urged the Charity Commission to reflect on the message from the committee and revealed that it would shortly be setting out a range of criteria, against which any scheme for charging should be judged.
It also reiterated that the Commission’s own governance should be reformed to ensure it is independent of government, and that in its view any changes to the regulator’s funding model should come with changes to its governance.
Sir Stuart Etherington, chief executive, said: “We know the Charity Commission is under financial pressure, and that it is in charities’ interests to have a well-funded regulator. But the Lords have been unambiguous in saying that they do not think the Charity Commission have properly considered their plans to levy fees on charities.
"The Commission must now consider the questions of principle that the committee have raised before it launches into consultation on the detail of a charging scheme.
“We plan to set out a range of criteria by which a charging scheme should be judged. These will include seeking reassurances that fees from charities are not simply used to replace rather than supplement its existing funding, and that appropriate accountability measures will be put in place.’
“Given concerns over partisan appointments to the Charity Commission board, there is a clear case that any move to charging should go hand in hand with an overhaul of the Commission’s governance to ensure it is properly independent of the government of the day. The committee are right to highlight the current absence of significant charity experience on the Commission’s board, and I hope that this is addressed in future appointments.”
NCVO is also pleased that the committee picked up its suggestion for statutory time off for trustees.
Etherington said: “I am very pleased that the committee has backed this recommendation. We know that many small and medium-sized charities in particular struggle to recruit trustees.
“Putting trusteeship on a footing with other public duties by ensuring employers had to make allowances for trustees, as they would for school governors or magistrates, would raise its profile and help broaden the range of people able to contribute by volunteering as a trustee.”
In a blog on NCVO's website, Karl Wilding, director of public policy and volunteering, said his organisation would be collaborating more and would respond with an "action plan".
Acevo: ‘The report offers real change’
Acevo said it was committed to improving governance and leadership and working in partnership with others to do so.
Vicky Browning, chief executive, said: "This is a comprehensive and progressive report which addresses itself to many issues the charity and social enterprise sector has been raising for some time. It's particularly welcome that the committee doesn't just air the issues but also offers real change.
“I'm naturally pleased to see the emphasis on the need for strong leadership and good governance, as well as recommendations around uptake of digital technology, better commissioning, stronger collaboration, a robust defence of the role of charities in campaigning and a call for better engagement between government and the charity sector."
Navca: ‘Acid test is what difference this will make’
Navca was broadly supportive of the report, but felt it could have gone further in some aspects.
Barney Mynott, head of public affairs at Navca, said: “This weighty publication shows the select committee has done a thorough job. We are delighted to see support for grant funding, a re-commitment to not paying trustees, recognition that charity campaigning is a ‘sign of a healthy democracy’ and the timely expression of concern about the Charity Commission introducing charging.”
“But maybe some of the commissioning recommendations lack ambition. Bidding consortia is not working for smaller charities and there are better alternatives, especially the Single Point of Contact model. We also would have liked a stronger endorsement of coproduction.”
“We notice the committee recognise how vital local infrastructure is and the many ways it can support charities but says very little about investing in these services. This is a mistake.”
“The acid test is what difference this will make. Rob Wilson and OCS have to take up the challenge of this report and turn these words into real support for charities.”
CFG: ‘We must not rush into charging’
The Charity Finance Group is pleased that the committee has noted the concern around charging for regulation.
Andrew O’Brien, head of policy and engagement, Charity Finance Group said: “So far, we haven’t seen a case made for charging and our research has highlighted a number of concerns around the independence of the Commission. We are pleased that the committee has picked up these issues and is encouraging the Commission to make a better argument for why charging is necessary.
“We must not rush into charging, as it could have significant consequences for the future of the sector and public confidence in charities. Short-term pressure on public finances, should not lead to changes that could have long-term damage.”
He also urged government to address issues with commissioning and irrecoverable VAT, which were raised in the report.
“The report has rightly highlighted the need for commissioners in the public sector to pay the full cost to charities for the services that they provide. Implementing full cost recovery, particularly for small charities, is essential for the sustainability of many charitable organisations. It is now up to government to act on this report and educate commissioners.”
“Irrecoverable VAT is a long running issue and with the Brexit vote, we now have a chance to finally reform the system. Polling by CFG and Institute of Fundraising has found considerable public support for this change, and politicians now need to step up and deliver.”
Small Charities Coalition: ‘This report must not sit on a shelf’
The Small Charities Coalition said that it was important that government and others now take action.
Becca Bunce, policy and engagement manager, said: “The wide scope of issues raised in this report demonstrates the range of competing issues facing small charities today. It also highlights the need to support these organisations so they are able to continue to provide for their beneficiaries.
“It is important that this report does not just sit on a shelf, as whilst the issues are complex and many, there are clear calls to action. In particular, we must ensure that commissioning reform works for small charities. The Lords rightly note that currently “the commissioning landscape is skewed against smaller charities”.
“The minister for civil society announced measures to begin to address this last year and it is essential that all stakeholders work together to ensure these are strong enough to bring the change that is needed.
“Across all of the recommendations, we must continue to make space to hear and champion small charities voices. Despite being 97 per cent of the sector, they often still go unheard. We look forward to continuing to collaborate with organisations across the third sector and more widely, to ensure that small charities are at the table in decisions affecting their futures."
ACF: ‘Government must consider evidence from funders’
The Association of Charitable Foundations urged government to consider how to take the report's recommendations forward.
Carol Mack, chief executive said: “We are particularly pleased that the evidence given by ACF on the vital work of foundations, the importance of grant-funding and the desirability of supportive, enabling relations between charities, the government and the regulator have been so extensively acknowledged.
“It is also important that the voice of funders themselves were heard. We urge government to consider fully the quoted evidence given by ACF members, as funders and social investors, on issues such as core funding, the pressure on services, the significance of small and medium sized charities and the role of foundations in building leadership.
“The committee has produced an extensive, consensus report, with specific recommendations for funders and infrastructure bodies. We must all now take time to consider the report in more detail, and ACF will be analysing and testing the findings with members. For now we are eager to see how the government ensures the policy implications of the findings are worked through into actions that will enhance the resilience of charities and maximise their ability to deliver impact in service of their beneficiaries.”
NPC: ‘The committee has failed to bite the bullet on paying trustees’
Charity sector think tank, NPC, said the conclusions of the report were mixed.
Patrick Murray, head of policy and external affairs, said he was pleased that the committee recognised “importance of charities understanding and demonstrating their impact, not least to ensure transparency and accountability to stakeholders including beneficiaries, and in particular recognition for efforts such as the Inspiring Impact programme”.
He was also positive about the recommendations relating to commissioning and strengthening the Social Value Act.
But said there were “some areas where the Select Committee could have done more”.
“We are disappointed to see the committee recommending against further reporting. As NPC has set out before ensuring boards report on impact will drive a different focus beyond organisational survival. There is no reason for this to be a burden on smaller charities as it can be done on a proportionate basis.
“Similarly the committee has failed to appreciate that providing information to people setting up a charity about what other charities working on similar causes in their area exist, and how they are performing, can be done relatively easily through providing data the Charity Commission holds.”
He added that the select committee has “failed to bite the bullet on paying trustees”.
“The idea that paying expenses is enough to compensate people for time missed from work, or caring responsibilities for example is erroneous. It should be up to charities to decide themselves and be able make the case if they believe it will enable them to deliver greater impact.”
DSC: ‘Thrilled about the revitalisation of grants’
The Directory of Social Change, which is involved in the Grants for Good campaign, said it was “thrilled” about the call for more grants.
Jay Kennedy, director of policy, said the report was a “colossal amount of work” and thanked the committee.
“DSC is thrilled to see the Committee include sections and recommendations on ‘a revitalised role for grants’ in commissioning and in supporting charities generally. Government needs to seriously consider all of these points and open a real dialogue with the sector about grants – at national and local levels.
He was pleased about the recommendations about the Charity Commission charging but said: “Unfortunately they stopped short of recommending against the idea completely.”
He also warned of the risk that the report is ignored and said: “There is so much to consider and it will take time to digest. We’ve seen many reports of this type over the years, and the risk is always that no matter how well-intentioned, their impact becomes dissipated.
“For example, Lord Hodgson’s sound report on revamping the Lobbying Act, which the government commissioned, has been gathering dust for a year with zero action. The committee rightly notes that his recommendations need to be taken up.”
Power to Change: ‘Voluntary groups should jump at the chance to share private sector expertise’
Power to Change, grant funder for community businesses said the reported highlighted how some charities needed to adapt and form new partnerships.
It also said it will be publishing a new analysis of the Social Value Act this year.
Vidhya Alakeson, chief executive, said: “The committee is absolutely right that government should encourage civil society to become more business-savvy. There is so much expertise in the private sector, and voluntary groups should jump at the chance to share in it.
“We see great examples of community businesses who benefit from the advice and skills of local businesses. If large employers got help from government so that staff could do more with community groups, this would be very good news.
“This is part of a bigger movement. Grants will always have an important role to play, as the report recognises, but the old-style public grants system has less and less capacity to deliver. Many groups, led by community businesses, are already focused more on their trading profits than applying for grants, precisely because this is what will guarantee their chance to do good long into the future.”
ICSA: ‘Regular skills audits are essential’
ICSA: the Governance Institute endorsed the committee’s recommendation for regular skills audits.
Louise Thomson, head of policy (not for profit), said: “Regular skills audits are essential as they are the primary way that charities can ensure that trustees have the necessary capabilities to undertake their vital governance role. With specific regard to the Committee’s suggestion of a template for inductions and free access for smaller charities, we have guidance on this which smaller charities are welcome to access.
She added: “‘ICSA actively supports governance in the sector and welcomes opportunities to work with partners to further enhance understanding and the application of good governance in all sizes of charities.”
Support for fundraising ‘big opportunity that has been largely overlooked’, says IoF
The Institute of Fundraising has said that the lack of support to help small charities fundraise represented a "big opportunity that has been largely overlooked" by the House of Lords report.
The IoF statement said: "There is a huge amount in this detailed report that we support and would like to see put into practice in the near future. In particular the opportunities presented from devolution processes and on improving grants and contracts are key points that should be progressed.
"There is a big opportunity that has been largely overlooked in the report - the potential presented by more and better support to help smaller charities to fundraise. The link between the public and the causes they support goes to the heart of the charity sector. On average, For every £1 invested in fundraising, roughly £4 is received for good causes. Much of the most innovative and cutting edge practice in the sector is led by charity fundraisers. And yet, some recent surveys show that fewer than one in four local charities and groups feel they have the skills needed to run a successful fundraising campaign.
So, in addition to the important measures in this report, we would like to see more from government, funding bodies and the charity sector itself to step up support for excellent fundraising to help smaller charities to flourish in the future."
