Charity sector leaders have warned that the Charity Commission is losing the trust and confidence of the sector and that changes are needed at board level.

An analysis of the current governance of the Commission by Civil Society News shows that there are a number of instances of perceived politicisation, and that there are a number of examples of the board encroaching on what were traditionally executive functions.

The time board members are able to dedicate to Commission activities has more than doubled under the current arrangement.

And five of the seven board members are about to come to the end of their first three-year terms, with no information about who will replace them.

Charity sector representatives have expressed concern about the make-up of the board and urged the Cabinet Office to appoint a more balanced group of representatives.

Of the seven current board members, Tony Leifer’s term ends this month, Gwythian Prins and Eryl Besse in May and Claire Dove and Orlando Fraser are set to stand down in June. The Cabinet Office has still not replaced Peter Clarke who left the board last autumn to become the chief inspector of prisons.  

Sir Stuart Etherington, chief executive of NCVO, said: “In the interests of confidence in the Commission, we need absolute clarity and transparency on how board members are to be appointed as soon as possible. It’s important that the board has a range of strengths among its members, including experience in charities.

“We also need an update on what the board’s ongoing involvement in the day-to-day running of the organisation is. Following the NAO’s report last year we urged the Commission to return to a more conventional division between governance and executive as soon as possible. With an experienced senior staff team in place it is not clear why the board would continue to have hands-on involvement.”

Neil Cleeveley, chief executive of Navca, said the recent behaviour of the Commission is making things harder for charities, and that while it’s right for the Commission to be a “critical friend”; at the moment the “Charity Commission is not getting the balance right and as a result they are losing the trust of those they regulate”.

Jay Kennedy, director of policy at the Directory for Social Change, says: “Many recent Commission decisions and statements have focused on ‘public trust and confidence in charity’ and trustees’ duties to consider and manage reputational risk. Yet the public statements of a number of board members raise questions about the Commission’s own impartiality and the confidence charities can have in its judgments.”

Dan Corry, chief executive of the think tank New Philanthropy Capital, suggested that having more people with a grounding in the sector on the board would help improve its governance.

“I don’t want to pack it - but there does seem to be a lack of people who have actually worked in a charity.”

In a statement the Cabinet Office said: “No decisions have yet been made on re-appointments or recruiting new board members.  An announcement will be made in due course."

The minister for the Cabinet Office, Matthew Hancock, can reappoint board members whose performance has been deemed satisfactory.

Commission response

In response to concerns about the board’s involvement, the Charity Commission said: “The Charities Act 2011 gives the Commission its constitutional authority and sets out clearly the role of the board, which is markedly different to that of most other non-executive directors of public bodies.

“The Commission accepted the NAO’s recommendations to ‘keep under review its level of involvement in executive decision-making’ and to ‘complete the review of the governance framework and assessment of board effectiveness’.  
 
“The independent review of board effectiveness concluded that the Board should decide which 'functions to reserve to itself and which to delegate to the chief executive and staff' and that it 'has the authority to intervene directly in operational matters, particularly those which affect the Commission’s reputation and performance'.
 
“As a result of the review, changes to the Commission’s governance framework were made. The framework, and a summary of the review of Board effectiveness, are available on the Commission’s website. The Commission has kept the NAO informed of the progress it is making against the recommendations and expect it to follow up with the Commission in the coming months. The Board continues to operate in line with the role set out in the Charities Act 2011 and its own governance framework.”

Read our analysis of the Charity Commission's governance.

And the blog The problem with the Charity Commission's governance